A. Earned credentials are an important indication of an advisor’s academic preparation to serve clients. However, not all designations are created equal. When an advisor presents him/herself as qualified by one or more professional designation, there are four basic questions that you should answer to determine the professional standards represented by the credentials.

1. Is the designation client-oriented? Some designations are designed for financial managers who work for corporations and are better classified as technical credentials. Advisory designations test the advisor’s understanding of an individual client’s total financial situation: age, earnings, dependents, tax circumstances, risk tolerance, expense requirements, and much more.

2. Does the designation demand that the candidate prove mastery of a body of knowledge? Reputable designations require that the candidate pass one or more examinations proving his/her understanding of the technical material represented in the credentialing program. How rigorous is the preparation required for the examination? Some designations simply require attendance at a single seminar and payment of a fee. Considering the complexity of the financial services environment, clients must expect more from their advisors.

3. Does the designation require continuing professional education? Financial Services is one of the most rapidly changing areas of business today. These changes can present a bewildering array of decisions to be made by consumers. Does your advisor stay abreast of this changing environment with a designation that requires a minimal level of continuing professional education?

4. Is the designation controlled by an independent organization and supported by a code of ethical conduct and/or professional standards? A strong sponsoring organization is your protection should an advisor prove unworthy of the standards of his/her designations. Designation sponsors take seriously the integrity of their brands and will support the clients’ interests in order to assure respect for all who advertise the designation. Statutory standards for licensing are generally less stringent than the ethical standards required of most voluntary credentials. Also, some designations have been created by groups of advisors to help them sell their services without having to prove their qualifications to an independent testing organization. Some of these “house” programs are quite effective, but the consumer should be careful to investigate.

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