Financial Advisor Credentials
Every advisor will claim to be a financial expert. They know this is what you want to hear when you select a financial advisor.
Unfortunately, there are real and fake experts and it is your responsibility to know the difference.123
There is no industry regulation that protects you from this deceptive sales practice.
Sources of Knowledge
There are four primary sources of knowledge that increase the expertise of financial advisors:
- Years of Experience
- College Degrees
- Industry Certifications
- Association Memberships
Years of Experience
It takes years of “relevant” experience to become a financial expert.
For example, you need expert advice that will help you develop a comprehensive retirement plan. So, you need an advisor with years of “relevant” retirement planning expertise.
You do not need an advisor who claims to be a planning expert but has spent the past several years selling mutual funds and annuities.
Education is an important source of knowledge if the degree came from an accredited college or university and was in a financial discipline.
Watch out for fake degrees, in particular, advanced degrees. There are diploma mills that sell degrees to financial advisors.
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.
You should not assume the number of letters after an advisor’s name makes him a financial expert. Advisors can purchase certifications the same way they can purchase fake college diplomas.
We recommend using Paladin’s Check a Credential service to read reviews and ratings for more than 250 certifications that are used by financial advisors. The service is free and there is no registration requirement.
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 to maintain memberships.
Some of the best associations are: CFA Institute, IMCA, NAPFA, FPA, and AICPA.