A Guide to Professional Designations for Financial Advisors

If you are looking for someone to help you with preparing for retirement, you might have come across financial professionals with alphabet soup after their name. What those letters generally represent are professional designations.

These designations are programs in which an advisor has completed certain studies and exams in order to have professional recognition of their expertise in a certain field. For example, some designations for financial advisors cover retirement income planning.

Other designations deal with high-level knowledge and planning concepts around life insurance products. Then some designation programs recognize an advisor for high-level knowledge of overall concepts, such as around investments, retirement, taxes, financial planning, insurance, risk management, and estate planning.

How Can Professional Designations Help with Hiring an Advisor?

If you are looking for a financial professional to help with your situation, then these professional designations can be a nice clue-in of what expertise that someone brings to the table. These letters denote professional credibility and also a code of ethics in most cases.  

On the other hand, many highly experienced and competent financial professionals don’t necessarily carry this sort of recognition. How do you distinguish them, then? Check out what to keep in mind when hiring an advisor, if you are seeking out the right guide for your financial needs.

All of this said, there are many professional financial designations. Sometimes it’s hard to discern which credentials really mean something and which ones don’t.

Let’s go over some of the professional designations for financial advisors that deal with retirement and life insurance products, since those are tied to contractually guaranteed strategies covered on this site. Here’s a breakdown of the major financial designations and the requirements for them.

Chartered Life Underwriter® (CLU®) Designation

This designation is the oldest professional credential in the financial industry. It was first introduced in 1927.

Over 106,000 insurance professionals have earned this credential since then. It resembles the Certified Financial Planner® credential (more on that in a second) in that it requires the completion of several classes. This includes several courses that the CFP® credential requires.

A total of eight courses related to various aspects of financial planning must be completed. The CLU® designation is offered exclusively by the American College of Financial Services. This credential also comes with a code of ethics and has periodic continuing educational requirements.

Required CLU® certification courses cover the following:

• Fundamentals of insurance planning
• Individual life insurance
• Life insurance law
• Fundamentals of estate planning
• Planning for business owners and professionals

Elective courses cover financial planning, income taxation, retirement needs planning, investments, disability & lifetime planning, and planning for special needs families.

Certified Financial Planner® (CFP®) Designation

This is perhaps the most widely known financial professional designation today. This designation was first created in 1974.

In order to carry this designation, applicants must have a bachelor’s degree plus at least three years of experience in the financial industry. Then they must complete coursework that covers insurance, investments, retirement, estate, and tax planning as well as ethics and the financial planning process.

A rigorous 6-hour board exam tests them on all of the topics with at least two case studies. Finally, they must adhere to a strict code of ethics that holds them to the position of fiduciary.

CFP® holders must complete 30 hours of relevant, continuing educational coursework every two years to remain in ‘good standing.’ They also pay an annual fee to maintain their credential.

Chartered Financial Consultant® (ChFC®) Designation

This credential is also offered exclusively through the American College of Financial Services. Over 40,000 financial professionals now carry this designation.

It was originally created to be a complement to the CFP® credential but for the insurance industry. Although it also requires the completion of eight courses, it doesn’t have a comprehensive board exam. It also comes with a code of ethics and has periodic continuing education requirements.

In the eight courses of the ChFC® designation program, the financial professional will study:

• The financial planning process
• Risk management strategies, including risks tied to insurance, human capital, wealth management, liability, and property
• Income tax strategies
• Retirement planning strategies
• Investment strategies
• Estate and gift-tax planning strategies
• Personal financial planning strategies
• Specialized strategies, including for divorced, blended, and other family households

Life Underwriter Training Council Fellow® (LUTCF®) Designation

Over 70,000 insurance professionals have earned this credential since 1984. This credential is offered by the National Association of Insurance and Financial Advisors (NAIFA).

Over 62,000 insurance professionals now carry this designation. Newcomers to the insurance space often pursue it because it offers marketplace training in addition to academic knowledge.

The LUTCF® designation also comes with coursework requirements. The coursework covers the following:

• Financial planning & risk management
• Getting started in the life insurance industry
• Life insurance products
• Insurance & investment products
• Strong focus on life insurance, annuities, mutual funds, disability income
• Other focuses are on long-term care, health & group insurance, and property & casualty insurance
• Risk management tied to retirement planning, estate planning, and special family situations
• Presenting basic plans to individuals and business owners

Retirement Income Certified Professional® (RICP®) Designation

Unlike investments and other parts of the financial space, retirement income planning is just now emerging as a field with more breakthrough research and insights. Record numbers of retirees are moving from the workforce. This is one driving factor behind why income planning is becoming more of a well-researched “science.”

There is a growing need for financial professionals who understand how to help them maximize their income, manage risk, and make their money last for their lifetime. The RICP® designation was created as an answer to this demand. The American College of Financial Services also offers this designation, and it’s one of the newest programs for financial advisors.

Financial professionals wanting to specialize in retirement income planning are a natural candidate for this designation. They must have a minimum of three years of financial industry experience in order to pursue recognition as an RICP® designee.

Like with other designations, coursework must be completed for the RICP® designation as well. Afterward, financial professionals must pass an examination covering topics relating to their studies. The topics covered in the coursework include retirement income strategies, portfolio assessment, personal finance, healthcare expense planning, home equity strategies, estate planning strategies, and more.

Upon completion, those with the RICP® designation are held to a code of ethics and must fulfill 15 hours of continuing education every two years.

What Else to Keep in Mind

There are many other legitimate financial designations, but these are probably the most common. These designations matter because they cover a great deal of material that normally isn’t found on the insurance and securities licensing tests.

Those tests mostly cover industry rules and the technical nuts and bolts of different parts of the financial industry. These credentials cover the meat of how to effectively do financial planning for clients.

Again, there are also very competent, experienced advisors who don’t carry any designations after their names. It’s prudent not to be too quick to dismiss someone only on the basis of their designations or lack thereof.

Finding the Right Fit for Your Financial Goals

Consult your financial advisor for more information on these designations and how they can impact you. What if you are looking for a financial professional to help you in your situation?

Whether you need someone to guide you with your retirement strategy, want another opinion of your current plan, or need something else, many independent financial professionals are available at SafeMoney.com to assist you.

Use our “Find a Financial Professional” section to connect with someone directly. You can request an initial appointment to discuss your needs and explore a potential working relationship. Should you need a personal referral, please call us at 877.476.9723.