When it comes to professional certifications, there’s no shortage of niche options for financial advisors eager to skill up.
The CFP Board’s Certified Financial Planner mark — easily the most popular and well-known credential in the industry — is held by more than 100,000 advisors. But for many professionals, that’s only the beginning.
For advisors looking to carve out more niche expertise, certifications like the Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), Certified Investment Management Analyst (CIMA), Certified Private Wealth Advisor (CPWA) and Retirement Management Advisor (RMA), to name a few, offer specialized technical education across different areas of financial planning.
Young advisors often pursue such certifications to impress clients, but industry veterans say most clients aren’t swayed by the abbreviation boggle. The real payoff, they argue, is the expertise gained along the way.
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“The reality is that clients will rarely hire you due to the designations you have behind your name,” said Matt Chancey, founder of Tax Alpha Companies in Tampa, Florida. “But the way you can make them feel when you have a conversation with them, [that] they can understand, is invaluable.”
For advisors like Mitchell Kraus, a 30-plus-year veteran of the industry and co-founder of Capital Intelligence Associates in Santa Monica, California, obtaining new certifications is more about serving his current clients better rather than trying to attract new ones.
“Each one was for separate reasons, but they were all done to help me improve at what I do,” Kraus said. “Most certifications don’t mean much to clients, but they can be a game-changer when they are looking for one.”
Last year, Kraus obtained his eighth certification, the Certified Exit Planning Advisor (CEPA) mark, after more of his clients began talking about exiting their businesses. Maintaining those certifications can be a double-edged sword, he said.
“The best and worst part of having eight designations is the continuing education,” Kraus said. “It is great that it forces me to constantly learn about areas I care deeply about. But it’s a terrible burden at times trying to make sure all my CE [continuing education] is completed and deadlines are met.”
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And the payoff isn’t just personal. Research shows that advisors with certain certifications tend to manage more assets on average.
A study released earlier this year by the Investments & Wealth Institute, which offers the CIMA, CPWA and RMA marks, found that IWI-certified advisors manage significantly more assets than their noncertified peers. For example, advisors with the CIMA certification and their teams oversee, on average, $267 million more in AUM than those without IWI credentials.
Teasing out causation in that dynamic is difficult — advisors already working with high net worth clients may obtain certifications like CIMA after the fact — but there’s no doubt that such certifications can help advisors manage the more technical aspects of serving those clients.
Sean Walters, CEO of the Investments & Wealth Institute, said that while a minority of clients may recognize the credential abbreviation itself, the value of such certifications is largely in the education they offer.
“Do they need to put the four letters after their name? I don’t care,” Walters said. “But if I’m your client, I would want to know that you can do those services and you can perform at a competent or higher level. And if there’s a third-party nonprofit party who’s basically assessing your competency at that mid or advanced level, I would want to know that as a client. That doesn’t mean I have to know what the letters stand for, right?”
“Nine times out of 10, the client doesn’t know what those letters are,” Walters added. “It’s more that the advisor knows what they’re doing in a new field that the client expects to get.”
For young planners, certifications like the CFP mark can be especially powerful.
John Bell, founder of Free State Financial Planning in Highland, Maryland, said seasoned advisors often rely on referrals and their track record to attract clients. But for those just starting out, credentials like the CFP are one of the few ways to signal trust and professionalism to potential clients.
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Luke Harder, a financial advisor at Claro Advisors in Boston, has experienced that benefit firsthand after passing the CFP exam at 22 years old.
“As a younger advisor, earning trust is hard. By obtaining certifications and continual learning, I feel way more confident advising clients double my age,” Harder said. “Without the CFP, I wouldn’t have nearly as many tools in the toolbox or the confidence I have when introducing myself. Nobody becomes a client because I’m a CFP, and many don’t care, but some do — and clients should.”
And whether or not the credentials stand out to clients, senior advisors like Chancey say that knowledge alone is enough to warrant obtaining them.
“Your level of job and career satisfaction goes up by understanding what you are actually doing,” Chancey said. “The industry as a whole would be better, and our country would be a better place, if everyone had a better understanding of how finances actually work. Designations are a great place to start since licenses alone are meaningless.”
