As financial advisors look for ways to distinguish themselves in the eyes of investors, many have turned to adding seemingly-important and official-sounding designations to their business cards and resumes. At last count, the Financial Industry Regulatory Authority (FINRA) listed 95 different designations, while a recent Wall Street Journal study found an additional 115.
The first challenge for investors is sifting through the 210 various designations, many characterized by acronyms that, on the surface, may reflect a high degree of education and experience. The second, more daunting challenge, is understanding the true value behind each label.
We want to be clear here. Some designations are truly valuable, requiring significant supplementary training, rigorous examinations and ongoing continuing education. Examples include:
Unfortunately, many others do not reflect an added benefit. A significant number of designations flaunted by financial advisors are simply marketing gimmicks, illustrating little or no additional education or experience and providing no added advantage to investors.
So, how should an investor proceed?
Our advice – unless an advisor has one of the six proven designations listed above, an investor will need to do some research. A great start is the FINRA website, where you will find descriptions of most designations, including education requisites, testing requirements and continuing education guidelines. If you don’t see the designation you’re seeking, then head to your favorite search engine, find the organization and review the qualifications for the title of interest.
When all else fails, tread lightly and discount the designation until proven otherwise. For a profession that relies so heavily on trust, the overflow of fluff designations is, quite frankly, rather sad.
Unfortunately, as long as the financial services industry is willing to tolerate the acceptable, rather than demand the exceptional, we expect these types of issues will continue to surface.
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