Though the initials behind a financial advisor’s name might initially make them appear more professional, intelligent or experienced, that isn’t always the case. You’ll have to dig a bit deeper into the advisor’s business model before you give him or her or stamp of approval (and reigns to your money wagon.) Though some senior designations do imply years of education and experience behind them, most are just used as marketing tools. According to this article by AARP, most states have laws restricting “self-serving or misleading senior designations” but that doesn’t really matter considering most consumers don’t understand the slight differences anyhow.
Let’s take the CFP for example. CFP stands for Certified Financial Planner, but what does that mean exactly? If someone has a CFP behind their name you can bet they have attended a variety of courses and pre-requisites, passed a rigorous exam, had at least three years of financial planning experience, and committed to completing at least 30 hours of continuing education every two years. You can also bet that they have a pretty broad knowledge covering a variety of *exciting* topics such as personal financial planning, portfolio management, budgeting, estate planning and tax. But all that knowledge, experience, and confidence gained means nothing if your CFP works for a company that only sells specific financial products or strategies.
You may have heard us say that we are product-agnostic. That means that we let the tax code determine which products or strategies work best for you, not which commissions are going to make us richer. If you don’t like a product or strategy we recommend, no problem, we will find you another one.
When you are shopping for a financial advisor, make sure you find out the company’s business model before you sign your name on the dotted line. It’s far more important than the initials behind the advisor’s name. If an advisor is merely peddling a high commission product or using their designation as a marketing gimmick, toss their business card in the trash and keep searching for an advisor who has YOUR best interest in mind. Like us.