Credentials in the Financial Services Industry can be confusing – have you ever come across someone’s title that includes the “alphabet soup” behind their name? Perhaps on LinkedIn you have stumbled upon someone whose name looks like this:
When choosing which professionals to use, their credentials can certainly exemplify knowledge and skill in a certain field, but it is important to be able to differentiate respected industry credentials from those that can be obtained in a matter of several days or do not have an experience requirement.
Almost anyone can provide good advice when things are going well, regardless of their credentials, but it is important to make sure you have the best professionals in your corner when things hit the fan:
- Would you go to a doctor who is not an MD or a DO?
- Have your taxes done by someone who is not a CPA?
- Let an attorney who never went law school draft you a trust?
When choosing the financial advisor who will guide you through retirement, shouldn’t you know that they have met a high standard of education and experience requirements? Ultimately, taking the wrong advice could mean financial hardship, or in the worst case, running out of money in retirement.
Three of the most respected credentials in the financial services industry include the following:
- CFP® (Certified Financial Planner)
- CFA® (Chartered Financial Analyst)
- CPA (Certified Public Accountant)
What is the CFP® designation and how is it obtained?
According to the CFP Board’s website, the “CERTIFIED FINANCIAL PLANNER™ certification is the standard of excellence in financial planning. CFP® professionals meet rigorous education, training, and ethical standards, and are committed to serving their clients’ best interests today to prepare them for a more secure tomorrow.”
- Education – CFP® professionals must hold at least a bachelor’s degree and are required to complete coursework on financial planning before being eligible to sit for the CFP examination. According to the CFP Board’s website, this coursework takes 12 to 18 months on average. Upon completion of the education requirement, those looking to become CFP® professionals may refer to themselves as CFP® Candidates for up to five years.
- Examination – After the coursework has been completed, those looking to become CFP® professionals must sit for a 170-question examination which has a historical pass rate of approximately 60 percent.
- Experience – Even after the examination has been passed, the experience requirement states that those looking to become CFP® professionals must complete 6,000 hours of financial planning related experience or 4,000 hours of apprenticeship experience that meets further requirements. Further, there is an ethics requirement that must be submitted to the CFP Board where the CFP® candidate commits to acting as a fiduciary.
The work is not over upon achieving the CFP® marks. CFP® professionals must complete 30 hours of continuing education every two-year period, some of which include ethics courses that reiterate the CFP®’s fiduciary duty to act in their client’s best interest.
As a result of the rigorous requirements to earn and maintain the CFP® credentials, it is no surprise that surveys have shown the CFP® certification serves as an important branding signal for clients seeking the services of a qualified advisor.
What is the CFA designation and how is it obtained?
According to the CFA Institute’s website, “A Chartered Financial Analyst (CFA®) charter is a designation given to those who have completed the CFA Program and completed acceptable work experience requirements.
The CFA Program is a three-part exam that tests the fundamentals of investment tools, valuing assets, portfolio management, and wealth planning. The CFA Program is typically completed by those with backgrounds in finance, accounting, economics, or business. CFA® charterholders earn the right to use the CFA® designation after program completion, application, and acceptance by CFA Institute. CFA® charterholders are qualified to work in senior and executive positions in investment management, risk management, asset management, and more.”
- Education and Experience – To sit for the first of three CFA examination parts, CFA® candidates must have a bachelor’s degree, be an undergraduate student 23 months or fewer from achieving their bachelor’s degree, or have a combination of 4,000 hours of work experience and or higher education that was acquired over a minimum of three sequential years and achieved by the date of registering for the Level I exam. Further, CFA® candidates must have four years of applicable work experience before being awarded the CFA® charter (after passing the examinations) and reference letters are also required.
- Examination – There are three levels to the CFA examination that require a robust understanding of investment analysis, ethics, and management. According to the CFA institutions website, approximately 900 hours of studying is typically required. The examination difficulty speaks for itself, as the pass rates for the most recently released results are as follows:
- Level 1: 38% (February 2023)
- Level 2: 44% (November 2022)
- Level 3: 48% (August 2022)4
Once the CFA® marks are obtained, the CFA Institute encourages their members to achieve 20 continuing education hours each year.
What is the CPA designation and how is it obtained?
The American Institute of Certified Public Accountants (“AICPA”) describes CPA’s as, “well-respected strategic business advisors and decision-makers. They act as consultants on many issues, including taxes and accounting. A CPA, or Certified Public Accountant, is a trusted financial advisor who helps individuals, businesses, and other organizations plan and reach their financial goals. Whatever those goals-saving for a new home, opening a new office, or planning a multi-billion dollar merger-CPAs can help.”
- Education – While the education requirements to become a CPA are state-specific, 150 semester hours of acceptable college-level accounting coursework and a bachelor’s degree are required by many states.
- Experience – Although again state specific, it is commonplace for CPA candidates to earn at least 2,000 hours of accounting experience before achieving the experience required to become a full-fledged CPA.
- Examination – The CPA examination consists of four tests in the areas of auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation. According to Becker, a CPA exam preparation software company, CPA candidates should study approximately 450 hours total between all four exams.
Upon earning the CPA credentials, members of the AICPA must complete 120 continuing education hours every biennial period, including required ethics courses to help keep them sharp.
Why is Corporate Experience in running a business essential?
In addition to credentials, knowing how to run an effective business is of utmost importance. Building the foundation for a solid and growing business is critical to business success, and financial services is no exception. In order to serve clients well, financial services firms also need to know how to:
- Ensure that the business is financially sound and built to support future growth,
- Focus on operational efficiencies to fully leverage its team members and resources,
- Have a well-defined strategy, execute on that strategy, and be able to shift focus as necessary,
- Stay compliant with rules and regulations,
- Develop a continuity plan in the case of emergency,
- Hire the best talent they can as needs arise.
Combined with credentials, education and experience, these critical elements provide confidence to clients and build the foundation for an exceptional client experience.
Do you have confidence in your team?
Knowing that your financial team meets a high standard of education and experience requirements can give you with the confidence you desire when it comes to your financial decision making. At Runey & Associates Wealth Management we are proud of the high-level of confidence we provide for the families we serve through our extensive experience, education, and dedication.
Not familiar with Runey & Associates? Meet your future team: CFA®, CFP® Candidate, CPA, Corporate CFO
James (Jamie) B. Runey III, CFA®, MBA
James (Jamie) B. Runey III is the Founder and CEO of Runey & Associates Wealth Management. He holds a CFA® designation, a globally recognized and respected appointment in the investment industry. Earning the charter requires a minimum of four years of professional investment experience, committing to uphold a comprehensive code of ethics, and passing three levels of rigorous exams that test an advanced curriculum of investment management and analysis skills. Jamie has a BS in Mechanical Engineering from the University of South Carolina (USC) and an MBA from the Moore School of Business (USC).
Before founding Runey & Associates, Jamie worked as an investment banker in New York City and then ran a private equity firm in China and Singapore.
Jamie is a native of Charleston, SC, and is married to Linda Runey. They live in Mount Pleasant with their daughter, Gabriella, and son, James. Jamie enjoys grilling during his free time (Jamie cooks up some fantastic steaks and ribs on the weekends!), golfing, and spending time with his family and friends.
Linda Engblom Runey, MBA
Linda Engblom Runey is the Chief Operating Officer, COO, at Runey & Associates Wealth Management. Before joining Runey & Associates, Linda was the Chief Financial Officer, CFO, of Sivantos (formerly Siemens Hearing Instruments), an organization with 550 employees generating $250M in annual revenues.
She also held CFO positions for the same global organization in China, Singapore, and Indonesia and served on several corporations’ Board of Directors. She has a BS in Finance from the University of Utah and an MBA from the Moore School of Business, University of South Carolina (USC).
Linda is originally from Sweden and is married to James (Jamie) Runey. They live in Mount Pleasant with their daughter, Gabriella, and son, James. During her free time, Linda enjoys spending time outdoors with family and friends, exploring new local areas and activities.
Tyler Peterson, CFP® Candidate, CPA, MBA
Tyler Peterson is a Financial Advisor at Runey & Associates Wealth Management. He holds a CPA designation, which distinguishes licensed accounting professionals committed to protecting the public interest. Tyler obtained his BBA in Accounting at Saint Bonaventure University where he also went on to receive his MBA. Tyler is a CFP® Candidate, has passed the CFP® exam, and is working on fulfilling his 6,000 hours of financial planning work experience in order to earn his CFP® designation.
Tyler is originally from Rochester, New York. He moved to Pittsburgh, Pennsylvania after college where he spent four years working in public accounting in the audit function, three of which were at a big four accounting firm. He moved to Charleston, South Carolina in November of 2021 with his girlfriend, Julia, and golden retriever, Vegas, where they are living in West Ashley. In his free time, Tyler enjoys exploring the local food scene and participates in outdoor activities including hiking, kayaking, and fishing.
List of sources referenced above:
- https://www.theadvisorcoach.com/how-hard-is-the-cfp-exam.html#:~:text=Depending%20on%20which%20study%20you,%C2%AE%20exam%20hovers%20around%2060%25.
- https://www.cfp.net/
- https://www.cfainstitute.org/en/programs/cfa
- https://www.cfainstitute.org/en/programs/cfa/exam/results-info
- https://us.aicpa.org/becomeacpa/gettingstarted/frequentlyaskedquestions
- https://www.becker.com/blog/cpa/managing-stress-on-the-cpa-exam#:~:text=Studying%20for%20the%20CPA%20Exam,-Once%20you%20have&text=We%20recommend%20that%20you%20spend,studying%20for%20the%20CPA%20Exam.
- https://www.investmentnews.com/cfp-board-tightens-grip-on-who-can-use-candidate-designation-58890