Can Post-CFP Credentials Help Advisors Better Serve Clients?

The Certified Financial Planner designation has become more prominent in recent years. According to the CFP Board, which issues the credential, there were more than 87,000 CFP professionals in the U.S. as of mid-July.

While the CFP certification has become a standard for financial planners and advisors who want to add to their knowledge base and boost credibility, some pursue additional professional designations. Many also seek training and certifications to address a specific market niche.

“The CFP designation has become the standard of the financial planning profession because it is an established baseline of education, competence and ethics,” says Brian Walsh, manager of financial planning at San Francisco-based SoFi.

“A decade ago, being a CFP professional was enough to differentiate yourself as a financial planner, but fortunately today it has almost become table stakes as a financial planner,” he adds. “That is exciting news because it means the financial planning profession is progressing, but it might be challenging for financial planners looking to differentiate themselves to their current and prospective clients.”

[Read: Financial Advisor Q&A: The Foundation for Financial Planning.]

The decision about post-CFP designations depends on an advisor’s interests, clientele and future career plans. For example, as a manager, Walsh does not work one-on-one with clients in the same way as most planners.

“I earned my master’s degree and am working on my Ph.D. at Kansas State University. A Ph.D. is appropriate for me because I hope to scale advice delivery through technology and education,” he says. “Research is core to developing the underlying algorithms used in technology and developing educational content that can make complex topics clear to millions of people.”

He adds that future growth of the financial planning profession “will depend on thought leaders making data-driven decisions to influence best practices that are based on research, like other professions. Those areas align with my interests and skill set, but if I directly worked with clients, a Ph.D. would not be appropriate.”

Brandon Renfro is another CFP professional who pursued traditional academic credentials, as well as industry-specific certifications. Renfro does planning for clients and also serves as a finance professor at East Texas Baptist University.

In addition to the CFP, Renfro’s credentials include the Retirement Income Certified Professional designation, the Enrolled Agent credential for tax practitioners, master’s degrees in finance and business and a Ph.D.

“The academic credentials give me a solid theoretical foundation, which helps, but the main value as a planner comes from applied knowledge learned by pursuing professional certifications,” he says.

“Post-CFP credentials are absolutely worth it if you have a niche-focused practice,” he adds. “The CFP is great, but the material is broad-based and general. It’s very rigorous and fine for a general practice, but it should be thought of as a foundation or minimum education standard for a niche practice.”

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Because his practice focuses on retirement income planning, he finds the RICP and EA credentials to be especially valuable, as the coursework covered material not found in the CFP curriculum.

“It’s helped my business exactly when it should,” Renfro says. “That is, when a potential client that fits my niche perfectly asks me if I know much about retirement taxes, or withdrawal planning, or some other specific retirement income topic. I’m able to tell them that I have specific training for that very thing, and then send them a link to info about the RICP and EA.”

The Certified Divorce Financial Analyst credential is increasingly popular for advisors who want to focus on a specific planning niche.

According to the Institute for Divorce Financial Analysts, which awards the CDFA credential, the number of CDFA professionals in the U.S. and Canada rose by 26% in the past five years.

“The CDFA designation has been useful,” says Clari Nolet, senior financial advisor at Team Hewins in Redwood City, California. “It was the first credential specific to divorce and the only divorce-specific coursework at the time. It requires that you take continuing education credits specific to divorce on a regular basis to stay abreast of divorce-specific planning topics.”

Nolet says having the CDFA shows her clients she’s serious about the divorce niche.

“It isn’t as valuable as the CFP, but in addition to the CFP, it is great,” she says. “For seminars and getting quoted it also puts me in front of others, regarding divorce as a subject matter.”

She adds that the credential helps her stand out from other advisors when she gets referrals from attorneys and forensic CPAs.

Another credential is the Chartered Financial Analyst. Like the CDFA, RICP or other professional designations, it can be held in addition to a CFP, or without it.

Jason Escamilla, CEO of registered investment advisory firm ImpactAdvisor in San Francisco, is a CFA. He also heads Impact Labs, which provides portfolio-construction software for advisors.

Escamilla says advisors should consider carefully whether the CFA is something they want to pursue, as the curriculum and tests are extremely rigorous. A person is only granted the charter after he or she passes three separate exams.

“I would recommend the CFA credential to individuals who are sure this is the direction they want to move their career and have sufficient experience and overall test-taking ability, because they need time to round out what the CFA program does not offer,” he says.

“There are plenty of CFA charterholders floating around,” he adds. “The question is: What do they bring to the table in addition to a deep understanding of portfolio management?”

In general, the CFP curriculum is geared toward advisors who work directly with planning and investment-advisory clients, while the CFA tilts toward analysts working in a more corporate environment. However, many hands-on planners and advisors hold the CFA, and many people working for mutual fund companies or other corporate entities hold the CFP. Some advisors hold both credentials.

Escamilla is candid about possible drawbacks for CFAs working one-on-one with clients. “For example, I believe CFA charterholders are handicapped when it comes to communicating in a client service or marketing role,” he says. “The retail investor wants clarity and certainty. The CFA charterholder knows all too well the risks and uncertainties. The CFA program prepares you to speak with professionals — people who are paid to understand the nuances and drivers of risk and return.”

Many CFA charterholders are employed at advisory and planning firms, sometimes in behind-the-scenes portfolio management roles, and sometimes successfully in client-facing roles. As with every role in the investment and planning industry, it comes down to personality and interests, as much as professional designations.

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Collecting credentials is not necessarily going to help an advisor’s business. For many, the CFP is exactly the ticket to help clients manage their financial lives.

“Having my CFP has expanded my practice to include clients who need more sophisticated advice such as stock option planning, detailed tax mitigation strategies, liquidity event planning, wealth transfer planning and more,” says Anderson Lafontant, senior advisor in the Advanced Planning Group at Miracle Mile Advisors in Los Angeles.

“The designation has allowed me to work very closely with entrepreneurs, running interference between their corporate finances and long-term wealth strategies,” she says. “I can now tread the porous line between their business and personal lives and help navigate some of the issues that often arise.” Planning for these clients can include long-term strategies for cash flows and growth, determining hurdle rates for business sales and whittling down expected capital gains from business liquidations, she says.

“Getting my CFP, versus another designation, was one of the greatest moves for my career,” Lafontant notes. “While being a Chartered Financial Analyst can help in our business, I’ve found that the industry is shifting towards a planning focus, and having my CFP has allowed me to be a step ahead of the trend.”

For an advisor considering adding credentials, it all comes down to relevancy for his or her client base, or for a possible career shift within financial services.

“There are a lot of credentials out there that will guide you deeper into an area,” Renfro says. “I don’t think there is any single post-CFP credential for everyone. Think of the CFP as a starting point, and find the credential that is relevant to your niche. Post-CFP credentials should be about specialization, not just more of the same.”

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