Advisor Credentials & Certifications

Low quality advisors have to compete with high quality advisors. They have to convince you they are real financial experts to make money.

This creates a major financial risk for investors who do not know how to determine the quality of financial advisors. How big is the risk? 

  • Advisors do not have mandatory disclosure requirements
  • Advisors do not have minimum education requirements
  • Advisors do not have minimum experience requirements
  • There is no written record of their verbal sales claims  

It's Your Money

You would never knowingly turn your assets over to an advisor who uses deceptive sales tactics. The consequences can destroy your financial security - just ask Bernie Madoff's clients. You have to be able to recognize deceptive to avoid them.

Sources of Knowledge

There are three primary sources of knowledge that increase advisor expertise:

  • College Degrees
  • Industry Certifications
  • Association Memberships

Experience, a fourth source, is covered separately.

Degrees

Education is an important source of knowledge if the degree:  

  • Came from an accredited college or university
  • Was in a financial discipline

Watch-out for fake degrees: 

  • There are diploma mills that sell fake degrees to financial advisors
  • Fake degrees do not have classes, study requirements, or tests

Certifications

Certification programs are the best way to acquire specialized knowledge in shorter time periods - if the programs have curriculums, proctored examinations, and continuing education requirements. 

Do not assume the number of letters after an advisor's name makes him a financial expert. They may have been purchased, like degrees, to deceive you into believing an advisor is more knowledgeable than he or she really is. Use our Check a Credential tool to get a better understanding of financial certifications.

  • The media calls the letters alphabet soup
  • Paladin Research has identified more than 250 certifications
  • Paladin estimates 35% of the certifications are fake (discontinued or low requirements)
  • Use Paladin's free Check a Credential service to view certification ratings

The best certifications are: CFA, CIMA, CFP, and CPA.

Associations

Top quality industry associations want to advance the professionalism of the financial service industry. They can be an important source of specialized knowledge if they have significant continuing education requirements.

Some associations are more social than professional and they do not expand the knowledge of their members. 

The best associations are: CFA Institute, IMCA, NAPFA, FPA, and AICPA.

Paladin says.....

Do not assume advisor credentials are real. They may be a deceptive sales tactic. 

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