As you leave college and enter the professional world, you will find out there are many different types of financial professionals.
From financial planners to accountants, there is a job title for just about everything in the financial industry. As a consumer, it’s wise for you to know who specializes in what area of finance, so you can be sure you’re getting the best advice.
You don’t want to be one of those people who gets burned by a Ponzi scheme or taken advantage of by a shady insurance salesman.
One way finance professionals set themselves apart from the rest is to take certification tests. These certifications are difficult to obtain, which means the qualities of those who pass the tests are looked at as greater than those who don’t.
Hiring a professional with proper certification means you are not only getting someone who is knowledgeable, but all certification exams test heavily on ethics, which is something all financial professionals need.
While in some cases it’s not necessary to have certifications to perform a job — I’ve been giving you financial advice all semester without being certified — those with certifications should be who you want to employ.
As a consumer, you should have a general knowledge of what these certifications mean.
The first certification, and most likely the one you’ve heard of, is a Certified Public Accountant, or CPA.
This is the premier certification for accountants that covers areas like taxes, bookkeeping and auditing. CPAs are highly specialized in all areas of accounting but aren’t necessarily knowledgeable about other areas of finance.
To obtain the CPA certification, one must first take 150 credit hours of college courses and obtain at least a bachelor’s degree. Then, you are allowed to take the 19-hour test.
One of the most recognizable certifications is the Certified Financial Planner, or CFP.
A financial planner is a professional who helps individuals make financial decisions to achieve their specific financial desires and goals.
Financial planners are expected to be able to help their clients with most financial decisions including investing, taxes, insurance and retirement planning.
To become a CFP, you must first receive a bachelor’s degree from a university that has been certified by the CFP Board. Then you must pass the CFP exam, which tests your knowledge in 78 different topics.
Financial planners can also have a different certification called the Chartered Financial Consultant, or ChFC.
The ChFC requires three years of work experience in the financial industry before you are allowed to take the exam that covers areas like financial planning, taxes and investments.
While the University is a CFP Board certified school, both the CFP and the ChFC are respectable certifications, and one is not objectively better than the other.
A professional certification you probably haven’t heard of is called a Chartered Life Underwriter, or CLU. A person who holds the CLU designation will generally work as an insurance agent.
To obtain the CLU, you must take 10 courses covering topics such as life and health insurance, estate planning, investments and pension planning. Then you must pass more than 20 hours of exams.
These are just a few of the professionals you will be dealing with as a consumer in the financial industry. There are many more certifications including the CFA, CMT, PFS and CIC, just to name a few.
All of these abbreviations make it sound more like a cable package than certifications for an industry, but I could never cover them all in one column. I encourage you to do some research on your own.
If you are a business major, be sure to go beyond this column and find what certifications you should plan to get for your career. They will give you a head start in your field.
For the rest of us, knowing these four types of certifications — CPA, CFP, ChFC and CLU — will make it easier to find qualified, reliable financial assistance when you need it.
Jay Cranford is a 20-year-old finance junior from St. Simons Island, Georgia. You can reach him on Twitter @hjcranford.