Will Earning CFP Dilute CFA?

Water Cooler Careers
#21

While I agree that the CFP is vastly inferior to the CFA, the CPA, or the JD, I would not agree that it is altogether worthless–neither to the client nor to the advisor.

I liken it to the part-time MBA at Local State University. It’s not Harvard, but it does still add value to some people. I had a bachelor’s in Spanish from a diploma mill, so getting a part-time MBA from LSU had a lot of value to me. Similarly, if you want to work in retail financial planning but have no other credentials to offer, the CFP can add a lot of value.

It is a benefit to both parties, because it shows that the advisor has at least a basic understanding of financial planning principles, and has enough brains and work ethic to get the education and pass the test. This benefits the advisor because (whether this is right, wrong, or indifferent) some people only want to work with CFP’s, because they view them as being “professionals”. And it benefits the client because they are now getting somebody who has done more than just pass their Series 6 and 63, and think they’re qualified to call themselves “Investment Advisor Representatives”.

I agree with Palacios, when he says, “you’d honestly be better off studying up on these topics through your own continuing education with better resources than what is used for the CFP exam.” But it’s not about what you know–it’s about what other people think that you know, and how you can prove it. So in this regard, the CFP is no different than the CFA. (The CPA is a little different, because it is actually a state-granted license that allows you to do things that a non-CPA can’t do, although it is very rarely used for that purpose.)

I also agree with Palacios when he says, “People should really consult CPAs for tax issues and Lawyers for estate planning.” However, this is predicated on the belief that the clients know what questions to ask, which is a HUGE assumption.

I believe that there is value to be added to a person that can quarterback the entire team. There are a lot of moving pieces to a person’s financial life, and most clients don’t understand how all the pieces fit together. That’s where planners add value–they understand how investments and taxes and estate planning all work together.

From personal experience as a tax accountant and a retail broker, I can assure you that the investment advisor (whatever you want to call them), the CPA (if the client even uses one), and the attorney very rarely talk to each other. When I was a tax accountant, the only time I ever called the broker was to get minute details, like stock basis or 1099’s. And as a broker, I had zero desire to talk to CPA’s or attorneys.

#22

When I share my pursuits with CFP’s they warn me that the charter will dilute my CFP designation.

#23

That doesn’t make much sense to me. If anything, the opposite would be true. The CFA should enhance the CFP, and the CFP should dilute the CFA (assuming that they are mixable and inseparable).

#24

In my opinion, there is no reason why anyone with a CFA, CPA, JD, or any other respected credential should feel the need to get the CFP. The CFP is for retail brokers that are trying to make themselves seem more legitimate to their clients while they rip their faces off with loaded mutual funds and 2% wrap fee accounts. Think about it…have you ever seen an estate planning attorney with a CFP or a CPA tout his CFP credential, and how many research reports do you see where the analyst has CFP behind his name? If you are really interested in the topics in the CFP, study up on your own. You’ll only scratch the surface of each topic in the CFP anyway.

#25

ho hum.

Like anything else in life. Study what you want and think is worth your while. No one says you have to put all the letters for every test you’ve taken after your name if you don’t want to.

By the way, you never hear JDs call themselves “Dr.” like MDs and PhDs, do you?

Otherwise, great comment, @PalacioHill

EDIT: notwithstanding I don’t think much of that Buy/Sell/Hold garbage the industry (CFA or not) turns out on a regular basis, either.

#26

I pretty much never use the title Dr… Every once in a while people use the title to introduce me and I think “Oh, right, I am entitled to be addressed that way.”

I remember as a kid picking up the phone and hearing someone ask “Is Dr. bchad pater in?” And I told the guy (in my 5 year old voice), “My dad is not a doctor, he’s a PHYSICIST!” Then I hung up, because it was maybe the second or third time I’d ever answered a phone and no one told me that I’m supposed to ask to take a message.

My dad was aways worried that he’d be on a plane and someone would have a heart attack, and someone would see Dr. on his ticket and look to him to save the guy. So I never heard him use the title. And I rarely do too, except as a joke.

There was a time years ago where I was in charge of looking for best uses of technology for an organization. So I had a lot of things I was experimenting with, and people would walk in to my office and say, “Ah, Mr. Gadget.” To which I’d reply, indignantly: “It’s DOCTOR Gadget, to you, Sir.”

#27

@Bchad - You should have told him that you used to work in France as a detective–that way they should have called you Inspector Gadget. BTW, what qualifies you to be called “Doctor”. MD? JD? PhD? What’s your area of study? Econ? Finance? Math?

@Justin - I have long disagreed with the idea that JD’s should be called “Doctor”. It’s not a terminal degree. Granted, it’s somewhat higher than a Master’s Degree, but if I were emperor, I would not allow lawyers to be titled “Doctor” unless they get the SJD.

@Palacios - I disagree that the CFP is useless, even for a professional with another “respectable” credential. For example (this may never happen, and if it does, it will be several years down the road), if I go back into tax practice, I want to eventually transform my part of the practice into “total wealth advisory”, which would include tax planning, gift/estate/trust planning, and portfolio management. At that point, I will be a CPA and hopefully a CFA Charterholder.

The knowledge that I would gain from being a CFP would be marginal at best. I would imagine that it would be a waste of time. However, there are a lot of people who like to ask, “Are you a CFP?” If I tell them, “No, but I’m a CPA and a CFA,” they will probably say, “I need somebody who’s a CFP,” because in the personal finance world, that is the most recognizable credential. I will likely lose business to the guy next door, because he is a CPA, CFP, and CBA (Certified Business Appraiser).

Uneducated clients do not know that CPA+CFA > CPA+CFP+CBA. They think the other guy knows how to do investments and can also do business appraisals, while I only know how to do taxes. They probably don’t even know what CFA means. I don’t know how many times I’ve heard, “What is CFA? Certified Financial Advisor?”

Note to all–I do not live in a big urban area with lots of CFA Charterholders. In fact, there are only 4 within 200 miles of me, and all four of them started their careers in big urban areas. If I did live in a big urban area, I might think differently. However, CFA has little brand recognition out here. CFP does.

#28

To the posters who dismiss the CFP: Why disparage another designation? While it’s true that the CFA requires a more challenging series of examinations that the CFP certification, it’s by no means the most difficult financial designation to obtain. Try passing all 9 actuarial exams, then go brag.

#29

Because there are many insecure people on this site. It’s the same people that want to limit the number of charterholders (as if that’s going to make them jump from BOM to front office).

#30

^This. Mad insecurities on this site.

#31

So many betas on this site, which is why I don’t even bother contributing much anymore. Do they even lift?

#32

I work for a large bank in the private client/WM world. Our PM’s are going to more of a CFP type designation than CFA. The CFP aligns more with being able to provide the portfolio management needed and ability to give the client a more rounded financial plan.

For me personally i’m looking to leave the relationship management side and get into the analyst side so that is the resason for my drive towards the CFA. I already have a CFP and have had it for 7 years. The company I worked for when I got it basically required it for anyone working with WM clients. The CFA was required for the analysts/inv. officers.

#33

OH… Shi*t… do they even lift… yeah… probably squatting in the curl rack… fools… don’t they know squats are bad on your knees!!!

#34

From a marketing standpoint to retail clients, no. Only because they do not understand CFA. And it only adds value if you’re in a role where you are required to raise retail client assets. From an educational stand point the cost is way too high to justify the worth. Study and read on your own, if you’re a charterholder you have the intellectual capacity to learn US focused financial planning on your own. The PWM emphasis in Level 3 is often over looked as well. It is especially prevalent in the more recent LOS of level 3.

If your employer looks highly upon CFP that’s another story. I have nothing against it btw and think it adds value to BD Advisors’ practices. RIAs and Institutional Managers should in no way shape or form need or require CFP if one is already a charterholder.

In all honesty taxes, retirement plans and estate planning are very basic in terms knowledge required by the financial advisor in day to day practice. I doubt as a charterholder you would work for anybody other than an RIA, so CFP is not very beneficial other than in a one man shop type role.

#35

This is the most crazy question I have ever read on this forum. The two are very complimentary in private wealth management. They overlap a little as a huge chunk of L3 of the CFA is CFP material: estate planning, taxes, where to stash your client’s cash, client profiling…etc. With the CFP you cover the broad picture of financial planning and with the CFA you dive deep down the investment analyst road when you look at client’s portfolios/assets. You learn how to zoom out and zoom in with both. They do not dilute each other. The CFP is not just for a one man shop, all the big firms love all their financial advisors to be CFPs. It’s like a masters degree in financial planning, in fact many Universities now offer the MBA with a concentration in Financial Planning to allow students to get credit to sit for the CFP exam. They prep you for the designation bc there is demand for it.

Many finance jobs will even say CFP, CFA or CAIA even…seen it a hundred time. Don’t be narrow minded.

#36

Well said.

edit.

#37

HNW PM, 12 years experience. I avoided getting CFP after CFA as I was thinking I might try to go straight into asset management and didn’t want to be labeled. I eventually realized I’m probably pretty good staying in my WM role instead and got the CFP.

I thought the program was useful and pairs nicely with CFA. It only took me a few months from start to finish to obtain the CFP. The test isn’t easy, but I feel that it’s a bit easier to pass than CFA L1. I definetely learned a lot from the program that I now use in almost every client meeting. It’s worth the time in my opinion and creates a little separation from the CFA only and certainly from the CFP only.