When it comes to selecting a wealth advisor, one thing is certain: You have a lot of choices. But how do you determine if an investment professional is truly qualified to help you with your strategic wealth planning? The decisions you make now will permanently impact your financial future, so you need to vet your wealth advisor carefully.
1. 401k Advisors Help You Decipher Your Current Plan
Before you start the 401k rollover process, meet with your 401k advisor to discuss your options. Bring your current plan’s most recent statement and documentation with you, so you’ll know:
- Your current balance
- How much you’ve contributed
- How much your employer matched
- Your account’s growth
You should also contact your plan administrator and have them walk you through the 401(k) rollover process. Your advisor will work with you to identify which funds your account is invested in the portfolio and its associated growth patterns.
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Your advisor will work with you to identify which funds your account is invested in and its associated growth patterns.
Credentials offer one way to evaluate a potential wealth advisor. These designations indicate that an investment professional has attained a certain level of education and training. Here’s a guide to eight common credentials.
Certified Financial Planner or CFP®
The CFP®, or Certified Financial Planner, requires a certain amount of college-level education, which may take the form of approved coursework, a degree, or a professional certificate. Along with these educational achievements, a CFP® must pass a 10-hour exam and have at least three years of on-the-job experience.
NAPFA Registered: Fee-Only
Fee-only financial advisors charge a set fee, rather than take commissions, for their advice, eliminating potential conflicts of interest and increasing your peace of mind. They’re registered through NAPFA; in order to qualify for the NAPFA designation, fee-only wealth advisors must meet stringent educational, experience, and ethical standards.
Chartered Financial Consultant or ChFC®
The Chartered Financial Consultant or ChFC® designation is bestowed by the American College. This credential requires a minimum of eight college-level courses in financial planning. Professionals must complete at least 30 hours of continuing education every two years in order to retain a ChFC® designation.
These designations indicate that an investment professional has attained a certain level of education and training.
Personal Financial Specialist: PFS
Certified Public Accountants (CPA) attain a Personal Financial Specialist or PFS credential by completing specific training on personal finance. The designation is awarded by the American Institute of CPAs and is often written as CPA/PFS. This designation often means that your investment professional can also offer tax advice.
Chartered Financial Analyst: CFA®
A Chartered Financial Analyst or CFA® has completed a stringent course of study that takes, on average, four years to complete. Bestowed by the CFA Institute, Charterholders have expertise in financial analysis, portfolio management and wealth management, have at least four years of qualified investment experience, and commit to a code of ethics and standard of professional conduct.
Accredited Investment Fiduciary: AIF®
An accredited investment fiduciary or AIF® must meet a combination of educational, experience, and professional development milestones, including coursework, a capstone project, an exam, and regular continuing education. The AIF® credential is issued by the Center for Fiduciary Studies and indicates a thorough knowledge of and commitment to fiduciary practice and standards.
Accredited Investment Fiduciary Manager: AFIM™
The Accredited Investment Fiduciary Manager or AFIM™ designation is also issued by the Center for Fiduciary Studies. Professionals with this credential have completed a rigorous academic program that explores fiduciary theory and passed the AFIM exam.
Chartered Institute Management Accountants: CIMA
The Chartered Institute of Management Accountants, or CIMA, is a global accountancy organization. Based in the UK, CIMA professionals obtain financial education and training with a management focus. The designation indicates that a professional has completed CIMA’s program at an accredited school.
When you’re vetting a potential wealth advisor, you can check their credentials using online tools, such as FINRA’s BrokerCheck or CFP’s verification tool.
Wayne Caldwell, CFP®, RFC
