NEW YORK – Financial advisers can come with an alphabet soup at the end of their names. If you're shopping for advice — and expensive advice at that — it pays to know whether your potential money man or woman studied for four years or four days, especially since an individual doesn't have to be licensed at all to give financial advice.
Here are the types of advisers you're most likely to encounter and the letters that go after their names:
CFP: A Certified Financial Planner is a general adviser who can help you with investments, retirement, estate and tax planning. CFPs take classes in stocks, bonds and everything else you'll run into in managing your money before passing a difficult and thorough test to earn their certification.
CPA and PFS: Accountant may still be an unglamorous job but the boring bunch with the CPA designation — for Certified Public Accountant — know their taxes forward and backward. They are accredited by the American Institute of Certified Public Accountants (usually through state government) and must meet experience requirements. A CPA who has met the requirements to become a Personal Financial Specialist can offer financial planning as well as tax help.
ChFC and CLU: These two designations are awarded to life insurance agents by the American College in Bryn Mawr, PA. Chartered Financial Consultants have at least three years' experience in the financial industry and must pass an examination covering tax, retirement and estate planning. Chartered Life Underwriter, involving 20 hours of exams, is the highest designation in the life insurance industry.
CFA: To become a chartered financial analyst, a candidate must pass three increasingly difficult exams, each level requiring about 250 hours of self-study, according to the CFA Institute, which accredits them. CFAs typically work for financial institutions analyzing securities but may also counsel wealthy investors. You're not likely to hire one to watch your money.
Is that all? Hardly. There are Chartered Investment Counselors, Chartered Market Technicians, Certified Investment Management Analysts and Certified Fund Specialists — but most of them work for financial institutions or organizations investing millions, if not billions.