CFA, CFP, CPA, RIA... What's the Difference?

There are many designations out there for financial advisors. Investors often cannot tell the difference or understand what each qualification allows the advisor to do in managing your account(s). We will attempt to briefly describe the differences here. If you have more specific questions or would like more information from us, please contact us.

In addition to choosing the right financial advisor with the best qualifications, here is a simplified breakdown of types of investment firms that are out there.

Chartered Financial Analyst (CFA)- all CFA holders have passed all three rigorous tests focusing on investment analysis and completed four years of qualified experience before earning the well-regarded designation. This degree is pivotal for asset managers and equity analysts (you would not want an advisor without one). The Chartered Financial Analyst curriculum is the only professional program that trains individuals to evaluate individual securities and manage an investor's portfolio. Therefore, the money you save is two-fold: our fees are cheaper AND our investment strategy provides you higher returns. Why choose a CFA?

Certified Financial Planner (CFP)- an applicant must pass a ten hour exam and agree to abide by a code of ethics. Although the CFP designation is a must-have for any financial planner, it does not mean necessarily that every CFP is a top-notch planner. If you are a financial planner or are seeking a financial planner, you need a CFP degree. CFA Charterholders can perform the same duties as CFPs, but the CFA qualification goes further and more in-depth than CFPs.

Certified Public Accountant (CPA)- a CPA has passed a wide-ranging and rigorous test. Surveys have shown that CPAs are the most trusted and respected of financial service professionals. However, a CPA designation doesn't mean that that person is qualified to plan your finances and investments.

Chartered Life Underwriter (CLU)- insurance specialist with three years minimum of insurance experience and has completed ten college-level insurance courses. This designation qualifies them to sell insurance, not to be an investment manager.

Chartered Financial Consultant (CHFC)- insurance agents who take three more courses than CLUs. You should expect that anyone with a CHFC will try to sell you life insurance but will not be qualified to provide you any substantial financial advice outside of the insurance industry.

Personal Financial Specialist (PFS)- members have experience in personal finance and pass an exam. Similar to CFP, except CFPs seem to be the more publicized designation.

Registered Representative (RR)- a stockbroker who has passed multiple securities exams (Series 6, Series 7, Series 65, etc.) and is registered with a broker dealer. They often do not do financial planning and are often categorized as salespeople.

Registered Investment Advisor (RIA)- an individual or firm that has registered with the Securities and Exchange Commission (SEC). This shows that the individual or firm is in compliance with registration requirements, but does not imply that they are approved by the SEC in any way. Any firm that is registered only as RIA but has no other qualifications is not an acceptable financial advisor for you. Less than 15% of RIAs hold the CFA designation.

Want to read a more specific example of how your money will grow more significantly than our competitors? See it in actual numbers. Understand the difference a few percentage points make.

Need help in deciding who should manage your investments? Here is a list of things to consider and questions to ask when performing your due diligence.

Source for degree distinctions: Mary Rowland (1997). Best Practices For Financial Advisors. Princeton: Bloomberg Press.

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Independent fee-based investment management advisor, retirement planning.

Cornerstone Investment Management and Consulting, LLC, 809-C Daphne Avenue, Suite 102, Daphne, Alabama 36526. Fee-based investment management, hourly financial advice and planning. Cornerstone is a Registered Investment Advisor (RIA) registered with the United States Securities Exchange Commission and is headquartered in the Eastern Shore of Mobile Bay in Daphne, Alabama.

For more information about our firm, or to receive a copy of our disclosure form ADV, please email us at info(at)csimac.com, or call 251.626.6292. Thank you for visiting our site.