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For as diverse as the industry is, all financial advisors have one important thing in common. They must all market themselves to attract new clients. This is true for partners at Ernst & Young or any of the other Big Four accounting firms; brokers with “bulge-bracket” investment banks, which serve large institutions and governments worldwide; professionals at boutique investment advisory shops; and sole practitioner financial planners.
In nearly every case where a financial advisor vies for new business, there will be an equally qualified competitor pitching the same prospect for that business. The one who can demonstrate that he or she has a business approach focused specifically on the prospect’s unique circumstances is more likely to win the account.
Having a focused — or niche — business creates significant marketing opportunities. It allows an advisor to differentiate his or her practice from the competition. In most cases, a specialist will prevail over a generalist. This is especially the case when the prospect is sophisticated or his or her situation is complicated.
Certification Differentiates Advisors from the Competition
Yet demonstrating one’s business focus can be difficult. Simply telling a prospect that you are an expert in a certain matter isn’t enough. The advisor needs to establish a credible case.
Holding professional certifications in a specific discipline provides concrete evidence that you are knowledgeable and experienced in your field. But which credentials make sense? FINRA recognizes more than 200 Professional Designations that an advisor can earn.
Match the Certification to the Practice
Professional certifications are important well beyond their ability to differentiate one financial advisor from another. They are a key component of an advisor’s professional development. So, the more specialized an advisor’s practice is, the more valuable professional certifications become.
Most financial advisors would agree that clients are best served when a recommended strategy is tailored to the client’s specific goals. A similar analogy can be made regarding professional certifications. The advisor should seek professional certifications tailored to their specific practice. Here are some examples.
The Certified Financial Planner designation is probably the most relevant credential a financial advisor can obtain. Most people can benefit from financial planning’s all-encompassing view of their resources. For this reason, professionals who advise individual clients should seek the CFP designation.
Financial planners consider more than just a client’s investments. They help them optimize their entire financial picture, from income and expenses to assets and liabilities, and from insurance and income taxes to retirement and estate planning.
The Chartered Financial Analyst designation demonstrates that the charterholder has a solid foundation in advanced investment analysis and portfolio management. The CFA designation has tremendous value for an advisor seeking a more limited role with clients than a personal financial planner takes.
Where the CFP has a holistic focus on a client’s complete financial spectrum, a CFA would have a narrower, more concentrated view, centered on the client’s investments. The CFA charter recognizes those with a keen talent for research. For financial advisors whose main deliverable is portfolio management, the CFA charter is a must.
The Chartered Financial Consultant designation was created to compete with the CFP credential. A financial advisor can obtain the ChFC certification more easily than the CFP designation. The coursework is similar, but there are no education or experience requirements, and there is no qualifying examination.
Nevertheless, the ChFC designation may be an appropriate credential for new financial advisors early in their careers who are looking to gain credibility before they qualify for the CFP designation.
For financial advisors whose practice emphasizes the use of mutual funds instead of individual stocks and bonds, the Chartered Mutual Fund Counselor designation may be appropriate. CMFC designees undergo a thorough education that focuses exclusively on mutual funds.
Applicants are taught how to analyze funds and conduct a client needs assessment in order to make appropriate recommendations.
The Certified Insurance Counselor designation is appropriate for financial advisors who specialize in risk management and emphasize the use of insurance to minimize exposures. The CIC designation is most suitable for professionals who sell a full suite of insurance products, including property/casualty, personal lines, commercial multi-line, and life & health.
A Chartered Life Underwriter designation distinguishes financial advisors who emphasize estate planning in their practices. It signifies an in-depth knowledge of life insurance and how it can be used to address clients’ estate planning needs.
Other Professional Certifications to Consider
Financial advisors who focus their marketing efforts on a specific industry, market niche, or a prospect’s occupation might consider professional designations that are closely tied to those unique segments.
For example, if you specialize in marriage dissolution, you might consider obtaining a Certified Divorce Advisor (CDA) or Certified Divorce Consultant (CDC) designation, among others. If you’re a CPA interested in providing personal financial planning services, you might seek the Personal Financial Specialist (PFS™) credential offered by the American Institute of Certified Public Accountants.
For nearly every market a financial advisor can specialize in, there is a professional certification available to help him or her become a better practitioner and more successful marketer.
In many cases, layering more than one certification on top of a main designation can further enhance an advisor’s credibility in the eyes of clients and prospects.
Professional Certifications Benefit Advisors and Consumers
Many long hours of study, years of experience, and a meaningful financial commitment are required to achieve professional certifications. The CFP and CFA designations take years to attain. Credentials such as these are remarkable career achievements that can strengthen your professional expertise.
Maintaining a professional certification requires hours of continuing education, which ensures that credentialed advisors remain abreast of industry matters. Furthermore, financial advisors must adhere to strict ethical standards to remain certified.
This results in a better client experience. As a certified advisor, your commitment to improving your technical capabilities will inspire your clients’ confidence in you and in the financial guidance you offer.
5 Cited Research Articles
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- FINRA. (n.d.). Investment Advisers. Retrieved from https://www.finra.org/investors/learn-to-invest/choosing-investment-professional/investment-advisers
- FINRA. (n.d.). Professional Designations. Retrieved from https://www.finra.org/investors/professional-designations
- Kimelman, J. (2019, September 16). Number of RIAs Hits Record High. Retrieved from https://www.barrons.com/articles/number-of-rias-hits-record-high-51568688482
- Levitt, T. (1980, January). Marketing Success Through Differentiation—of Anything. Retrieved from https://hbr.org/1980/01/marketing-success-through-differentiation-of-anything
- U.S. Bureau of Labor Statistics. (2018, May). Occupational Employment and Wages. 13-2052 Personal Financial Advisors. Retrieved from https://www.bls.gov/oes/2018/may/oes132052.htm