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What does a ChFC do?

Financial advice comes, mostly, in a sea of acronyms. There is the CPA (Certified Public Accountant), the CFP (Certified Financial Planner), the CIMA (Certified Investment Management Analyst) and more. Each certification marks a slightly different specialty in financial advice and management. That field also includes the ChFC: the Chartered Financial Consultant. They often do good work. Here’s how.

What Is A Chartered Financial Consultant?

The Chartered Financial Consultant (ChFC) is a certification offered by the American College of Financial Services. The school has offered this credential since 1982 and is, at time of writing, the only institution which does so.

Essentially a ChFC is an advanced form of the CFP (Certified Financial Planner) credential. Both professionals offer full-service financial advice on matters ranging from investments to retirement planning to taxes. But the ChFC offers a more difficult course of study.

The ChFC is less known than the CFP, but is arguably more thorough.

What Services Does A ChFC Offer?

What does a ChFC do?

A chartered financial consultant offers full-service financial advising. This includes, among other subjects:

Investment and Asset Management

An advisor in this field can help you to structure your investments. They can choose a path that best meets your personal goals and your financial position.

Saving and Budgeting

This involves helping the client assess their personal finances and figure out how to best save, spend and budget. The ChFC will help clients not only to meet goals, but set them realistically.

Tax Planning

This involves helping the client to plan around taxes. They can create a strategy that will maximize a client’s position when it comes time to pay income and property taxes.

Retirement, College and Estate Planning

A ChFC will help clients to prepare for major financial goals. This includes building a retirement account and managing it over time, preparing for a child’s college education and (if necessary) planning to hand down an estate.

What A ChFC Does Not Do

When looking at financial services it’s important to understand the limitations of various professionals. A ChFC can help you to create a budget and a financial plan but this is ultimately a general certification. There are certain specialized tasks that they do not typically perform, including:

Tax Preparation

A financial planner can help you to create a strategy for your taxes but they can’t actually prepare them for you. To understand your specific tax position you need to see a CPA. You’ll have to do the same to actually have your taxes prepared and filed.

Execute Trades

While your financial planner can help you to prepare an investment strategy, they can’t actually invest the money for you. A ChFC is not a broker.

Provide Legal Advice

Often there’s substantial overlap between providing legal advice and financial consultation, but that doesn’t mean you (or your advisor) should confuse the two. A ChFC can create a strategy for you on investment and asset management but they cannot advise you when the issue touches on matters of law. Only a lawyer can do that.

This can be particularly relevant in estate and tax planning.

Now, this does not mean that no Chartered Financial Consultant can never provide these services. Your advisor may also hold a CPA, work with a brokerage or operate as part of a law firm. A ChFC can have multiple credentials or at least access to those fields of expertise. However it’s important to understand that the ChFC credential alone does not qualify someone to opine on specialty subjects.

What Are The Qualifications For A ChFC?

What does a ChFC do?

Despite the overlap between a ChFC and a CFP, they are not technically related credentials. A professional does not need to be a certified financial planner to receive a chartered financial consultant credential.

The American College requires the following steps to receive the ChFC:

  • At least three years of full-time, relevant experience within the previous five years.
  • Eight courses issued by the American College for a total of 27 credit hours. Seven of these courses are required and cover subjects such as investment and retirement planning, insurance planning and the financial planning process. Two are elective.
  • Nine proctored exams, one after each course.
  • Maintain at least 30 continued education credits every two years.

Each individual course costs $810, though some specialized courses can range from $1,010 to $1,490. The American College offers a $2,150 starter package that includes the first three courses. Meanwhile, the $5,400 full eight-course designation package.

Bottom Line

This is a more rigorous course of study than that demanded by the CFP credential. As a result, it is typical for ChFC advisors to charge more than CFPs as they are considered more highly accomplished.

Unlike some, this is not necessarily a mid-career credential. Since a financial advisor only needs to have practiced for three years before earning this certificate it is quite possible to do so early on, and it is typically proper for a financial advisor to seek at least one major credential (either the ChFC or the CFP) as soon as practical.

Financial Consulting Tips

  • If a ChCP sounds like someone who could help your portfolio’s performance, it may be worth tracking one down. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • A financial consultant can only help you if you know what you want out of your investments. If you aren’t sure how much risk you can tolerate, how much you’ll need your investment to grow, or how much inflation and capital gains tax will affect your investment, SmartAsset’s investing guide may help you figure out your first steps.

Photo credit: ©iStock.com/scyther5, ©iStock.com/gece33, ©iStock.com/Cecilie_Arcurs

Eric Reed Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
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