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Alphabet Soup

Mark Eckman  |  October 28, 2019

WHEN YOU NEED expertise, you hire an expert. Water leak? Call a plumber. Electrical issue? Call an electrician. But when it’s a financial issue, the choice may not be so clear. Do you go to a CKA, a GFS or maybe a C3DWP? Chances are you haven’t heard of these designations.

I have 10 letters in my name. I also have 10 letters after my name: CPA, CISA and MBA. What do they mean? Only that, after a lot of education and passing a lot of tests, I met the minimum qualifications to claim these credentials.

Yet these mysterious acronyms have become a lucrative business. A growing number of organizations sponsor financial credentials—and legions of financial advisors want to bolster their credibility by building their acronym resume.

But do the acronyms themselves have any credibility? FINRA, the securities industry regulator, has a list of financial designations on its website. The list has 208 entries—and, even then, it isn’t complete. Read through the list and you’ll see designations focused on helping individuals in their financial life, as well as designations that deal with issues faced by companies sponsoring employee benefit plans. For everyday Americans, someone with these credentials might be helpful. But other designations focus on the marketing of financial services, retirement plan administration and other specialties—qualifications that might not provide any value to the typical family seeking financial advice.

Besides listing the acronyms, FINRA provides the name and status of the designation, the issuing organization, the requirements to earn the credential and how to file a complaint against someone with the credential. Granted, some credentials are obscure or even cover nonfinancial disciplines. Did you notice my CISA isn’t on the FINRA list?

The list provides a chance to educate yourself on the competencies a credential holder should offer and whether those competencies might be useful to you. Some credentials have very strong ethics and fiduciary standards—and others not so much. One of the sponsoring organizations on the FINRA list offers 12 different designations that only require an advisor to pay a monthly fee to the sponsoring organization: There are no education requirements, no testing, no fiduciary requirement. Just pay the monthly fee and add the acronym.

Will the designations held by your advisor be of any advantage to you? Ask these eight questions:

  • What credentials does your advisor hold?
  • What does the FINRA list say about each credential?
  • Is the credential being actively supported—or has the sponsoring organization gone out of business?
  • Do an internet search on the sponsoring organization. Does it appear to have integrity?
  • Does the designation signify anything—or is your advisor touting a credential that involves little or no education requirements?
  • Does the credential mean your advisor is better qualified to help you?
  • Does the sponsoring organization require credential holders to act as a fiduciary?
  • Contact the sponsoring organization. Have there been any disciplinary issues involving your advisor?

Mark Eckman is a data-oriented CPA with a focus on employee benefit plans. His previous articles were Financial Pilates and Giving Voice. As Mark approaches retirement, he’s realizing that saving and investing were just the start—and maybe the easy part. His priorities: family, food and fun. Follow Mark on Twitter @Mark236CPA.

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