What are the Different Types of Financial Advisors?
Decoding Advisor Designations
When selecting an advisor, you'll likely encounter a lot of acronyms and abbreviations that seem to blend together. What do they all mean? What's the difference, anyway?
According to the Securities and Exchange Commission (SEC), "a financial professional may use various titles whether or not he or she is registered or licensed with a regulatory authority."1 It's important to know that titles like "Wealth manager," and "Financial planner" are marketing tools rather than professional qualifications.
To help you determine the level of an advisor's professional experience, credentials, knowledge, and training, we've decoded some common advisor titles below. With this information, you can make more informed choices about the best professional to hire for your unique needs.
Certified Financial Planner
An advisor with a Certified Financial Planner™ (CFP®) mark has invested years of study, preparation, and practice to provide clients with comprehensive financial planning. The designation is awarded by the CFP Board, which sets and enforces the education, examination, experience, ethics, and other requirements for CFP certification.² To earn a CFP mark, a financial professional will need to pass a board exam after completing all necessary coursework.
After reviewing your entire financial landscape, a CFP will create a plan that takes into account your needs, challenges, resources, goals, and more. A CFP professional will provide a robust, comprehensive approach to managing your finances while adhering to a strict code of conduct that puts your interests first.
Chartered Financial Analyst
A Chartered Financial Analyst® (CFA®) is an analyst with a college degree who has at least four years of experience working in finance or investments and has passed a series of exams to prove their competency. CFAs are held to a standard of conduct as outlined by the CFA Institute, the chartering organization.
Chartered Financial Consultant
Awarded by The American College of Financial Services, the Chartered Financial Consultant® (ChFC®) designation indicates that the financial professional has successfully completed the equivalent of 27 semester credit hours of college-level courses. The ChFC will have covered over 100 topics on financial planning, passed an exam for each course, and have three years of full-time business experience within the last five years.
Chartered Market Technician
A Chartered Market Technician® (CMT®) is a financial professional with a global designation for technical analysis. Awarded to those who demonstrate mastery of a core body of knowledge of investment risk in portfolio management.4 CMTs are certified and regulated by the CMT Association.
A professional with a CMT develops deep knowledge in technical analysis and will directly impact the work of portfolio managers, hedge fund managers, investment advisors, RIAs, investment strategists, heads of research, and chief investment officers.
Series 7 Registered Representative
The Series 7 (General Securities Representative) exam, issued by the Financial Industry Regulatory Authority (FINRA), is a basic requirement for entry-level financial professionals. After passing the Series 7 exam, a financial professional may apply to sell securities, including stocks, bonds, and funds. The financial professional cannot sell investments like life insurance or commodities.
Series 65 Investment Advisor Representative
FINRA also administers the Series 65 exam, which is a pre-requisite for becoming a representative of a registered investment advisor (RIA) firm. Investment Advisor Representatives (IAR) are regulated by the SEC and can provide investment-related advice.
Many state securities regulators will allow CFPs, ChFCs, CFAs, CICs, and PFSs to receive a license without taking the Series 65 exam. IARs who have successfully passed both the Series 7 and 66 exams, and have been affiliated with a broker/dealer in the past 24 months, will generally be exempted from taking the exam. Note that applicants will need to satisfy other state requirements, such as a background check and payment of fees, in order to receive a license.
Due Diligence
When selecting a financial professional, we suggest that you inquire about their designations. The SEC recommends asking the following questions2:
- Who awarded your title?
- What are the training, ethical, and other requirements to receive the title?
- Did you have to take a course and pass a test?
- Does the designation require a certain level of work experience or education?
- Are you required to take refresher courses to maintain the designation?
- How can I verify your standing with this organization?
Seek out a professional with specific knowledge and expertise that applies to your unique situation. Keep in mind that many advisors hold multiple designations.
Finra.org lists countless other professional designations. If you don't see an acronym listed here, check out their database to find the designation and review its requirements.
1. "Making Sense of Financial Professional Titles." U.S. Securities and Exchange Commission. 2013. https://www.sec.gov/files/ib_making_sense.pdf.
2."About CFP Board." CFP Board. 2017. https://www.cfp.net/about-cfp-board.
3."Become a CFP Professional." CFP Board. 2017. https://www.cfp.net/become-a-cfp-professional/cfp-certification-requirements
4. "About the CMT Program." CMT Association 2023. https://cmtassociation.org/chartered-market-technician/
"Decoding Advisor Designations." FMeX. 2018.