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5 financial planning designations you need to know

  • December 18 2018
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Invest

5 financial planning designations you need to know

By Louise Chan
December 18 2018

Individuals and businesses that require financial services may choose to seek a licensed professional to help them settle financial transactions. But there are many special designations that can make selecting the most appropriate financial services professional more difficult than they expect – especially for individuals acting on their personal financial needs.

Financial designations

5 financial planning designations you need to know

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  • December 18 2018
  • Share

Individuals and businesses that require financial services may choose to seek a licensed professional to help them settle financial transactions. But there are many special designations that can make selecting the most appropriate financial services professional more difficult than they expect – especially for individuals acting on their personal financial needs.

Financial designations

Here’s a short list of financial planning designations to help you determine the most appropriate professional for your personal or business needs.

Financial planning designations and what they mean

A professional designation is a recognition given to individuals who have satisfied a prescribed set conditions that reflects the industry’s standards of excellence(i.e., education, experience, etc.). Professional designations are usually shown as a series of letters representing a particular specialisation after the person’s name – you may even have encountered some of the ones we discuss below.

There are over 61,000 licensed financial advisers in the Australian Securities and Investment Commission’s (ASIC) database as of 13 December 2018. The professionals listed in the database have different designations, which makes selecting one from among them quite difficult.

Meeting different professionals may also be confusing if they have different specialisations and designations. 

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But you may wish to narrow down your initial interview selection to the following five designations:

  • Certified Financial Planner (CFP)
  • Chartered Financial Analyst (CFA)
  • Chartered Life Practitioner (ChLP)
  • Chartered Wealth Manager (CWM)
  • Certified Public Accountant (Financial Planning Specialisation) (CPA(FPS))

Certified Financial Planner (CFP)
The certified financial planner or CFP designation requires a degree in a relevant financial education course and at least a full-year of industry experience.

Like the CFA designation, professionals must also master financial planning subjects and pass two rigorous exams before they can acquire the CFP designation. The CFP designation also requires professionals to abide by the strict CFP code of ethics and agree to pursue continuing education.

CFPs are knowledgeable and experience financial planning including but not limited to:

  • Retirement planning
  • Estate planning
  • Debt Management
  • Investment strategies
  • Superannuation
  • Risk management

Consult a CFP for general advice or if you want a holistic approach to financial planning.

Chartered Financial Analyst (CFA)
The chartered financial analyst or CFA designation is the highest designation that a financial services professional can achieve. It’s also one of the most difficult designations to acquire.

To gain the CFA designation, professionals must have a bachelor’s degree related to finance and experience in the financial services profession before they can even enroll in the CFA program. Then they must pass a set of three rigorous examinations that has an overall passing rate of 44 per cent since 1963.

CFAs may offer financial planning services to individuals, but many work in companies and focus on financial and risk analysis. What makes CFAs attractive to individual clients is their expertise on the financial and investment markets due to the rigorous training, testing and continued education CFAs had to go through to receive their certification.

A CFA is one of the go-to professionals for business owners.

Chartered Life Practitioner (ChLP)
ChLPs are financial service professionals who specialise in risk advising.  They practice risk assessment and management by creating financial and business risk strategies and solutions for their clients.

According to the Association of Financial Advisers (AFA), the ChLP designation provides professionals with a comprehensive knowledge so that they can transform academic studies to practical business outcomes.

ChLPs are best suited to advise business owners and individuals who are thinking of starting their own business.

Chartered Wealth Manager (CWM)
CWM is a globally recognised certification that equips financial professionals with the knowledge to develop and manage financial plans and investment portfolios.

Professionals with the CWM designation are knowledgeable about various types of investment assets, financial products, portfolio management, debt management, real estate, taxation, trusts and intergenerational wealth transfers, among others.

Approach CWMs for personal or business financial and investment advice, specifically when it comes to financial and/or investment objectives and strategies.

Certified Public Accountant (Financial Planning Specialisation) (CPA (FPS))
CPAs are financial professionals who have the educational background, training and license to offer accounting, taxation, auditing and other financial services to individuals and businesses. Some CPAs, however, may choose to focus their services on financial planning.

Qualified CPAs who are also licensed financial planners may apply for the CPA (FPS) designation if they have completed the requirements set by CPA Australia. These requirements include:

  • Background education on financial planning
  • Background on taxation studies (Registered Tax Agents in Australia are exempted)
  • Three years of valid financial planning experience in the past five years

This means financial professionals with the CPA (FPS) designation are experienced experts on financial and tax planning and may cater to individual and corporate clients.

Financial Services Guide (FSG)

ASIC requires licensed financial advisers to provide potential clients with a document called the Financial Services Guide (FSG). The FSG outlines all the services that the adviser is licensed to provide and their limitations.

If you’re still interviewing potential advisers, it’s important that you read and understand this document so you can be sure that the professional you hire will be able to provide all the services you require.

Explore Nest Egg for more information about financial planning.

5 financial planning designations you need to know
Financial designations
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About the author

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Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

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