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SmartAsset: How to Check a Financial Advisor's Credentials

Looking for qualified financial advisors is easier in today’s world than it has been in the past. Of course, you still have to vet candidates to make sure that you are getting the right guidance for your financial needs. Many individuals and companies call themselves financial advisors, but only those with relevant credentials can demonstrate proven experience. Here’s what you need to know.

If you’re looking for a fiduciary financial advisor, SmartAsset’s free matching tool can connect you with up to three candidates who serve your area.

How to Screen a Financial Advisor

The first step you want to take when vetting a financial advisor is to ask for the person’s credentials. And when you start looking for a financial advisor, you will see initials like CFA, CFP, CPA, CLU, and CAIA listed after their names. These designations indicate specific areas of expertise that an advisor is qualified in.

Here are 5 common certifications to look out for:

  • Chartered Financial Analyst (CFA). A CFA is an advisor whose expertise is in investments and securities. The certification is administered by the CFA institute.
  • Certified Financial Planner (CFP). This advisor is experienced in a wide range of topics in the finance arena. So, to become a CFP, a financial professional needs to complete a set of courses and pass a test. The test is administered by the CFP Board.
  • Certified Public Accountant (CPA). A CPA is a designation for financial analysts, accountants, and tax preparers. This certification is administered by the American Institute of CPAs (AICPA).
  • Chartered Life Underwriter (CLU). This certification is for insurance agents and it is administered by the American College of Financial Planning.
  • Chartered Alternative Investment Analyst (CAIA). A CAIA is for professionals who are managing alternate investments like hedge funds and real assets. This certification is administered by the CAIA Association.

Other common financial advisor certifications to look out for:

Use the SEC and FINRA to Verify Financial Professionals

SmartAsset: How to Check a Financial Advisor's Credentials

The Securities and Exchange Commission (SEC) website offers three resources to search for financial professionals:

  • SEC Action Lookup – Individuals (SALI). This resource allows you to find information about financial advisors who have been named in SEC court actions or administrative proceedings that resulted in judgments or orders made against them.
  • Investment Adviser Public Disclosure (IAPD). This tool on the SEC’s website will help you find your investment professional’s background if they are registered. You can enter their name on the IAPD website to see if they’re registered.
  • Financial Industry Regulatory Authority (FINRA) BrokerCheck toolYou can use BrokerCheck to find an advisor by their name, location, and Central Registration Depository. This will give you a snapshot of a broker’s employment history, regulatory actions, investment-related licensing information, arbitrations, and complaints.

Bottom Line

SmartAsset: How to Check a Financial Advisor's Credentials

Finding a financial advisor who fits your needs is going to take some work. And with so many certifications available, so you should meet with multiple candidates before settling on one. Make sure to verify their credentials and ask if the person is a fiduciary, which means that the financial advisor must act in a client’s best interest.

Financial Advisor Tips

  • Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now
  • If you’re just starting to invest, working with a robo-advisor may be helpful. Robo-advisors offer portfolio management services just like traditional financial advisors, but they typically have lower fees and account minimums. Here are the top 10 robo-advisors.

Photo credit: ©iStock/seb_ra, ©iStock/Ridofranz, ©iStock/Courtney Hale

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