A CFA or chartered financial analyst is a professional who offers investment advice and portfolio management. Their focus, which is on analyzing specific securities and various financial reports, is distinct from but complementary of the focus that financial planners have. All CFAs must pass rigorous exams to get the designation, which is considered one of the most prestigious and sought-after in the financial world. Finding a financial advisor with this designation is a good sign that you will have a strong support system to grow your wealth. Finding one doesn’t have to be hard either. In fact, you can use SmartAsset’s free tool to find a CFA that serves your area.
What Is a CFA?
CFA candidates must pass exams administered by the CFA Institute. CFA recipients often work with high-net-worth individuals, and many have the job title of portfolio manager. As a result, working with a CFA might be a good idea if you need help deciding how to allocate your investments or which securities to sell and which to buy. A CFA is also a great help to an initial build of your entire portfolio to help you meet your financial goals. Either way, a CFA is a good choice to help answer any questions you may have about your finances.
Other designations that financial advisors may have instead of the CFA include the CFP or the CIMA. While there is often overlap in the knowledge and skillsets these professionals have, CFAs are generally good at advanced investment analysis and are a better fit for complex financial situations.
Where to Find CFAs
Given that there were more than 175,000 CFAs active in 2022, according to the CFA Institute, chances are high that there are at least a few who serve your area. However, simply holding the CFA designation does not guarantee every one of them is of the same quality or has the same professional focus. In other words, you may want to do a little more due diligence than simply typing “CFAs near me” into Google.
There are a few ways you can find CFAs that might be a good fit. One place to start is with websites such as The National Association of Professional Financial Advisors (NAPFA) or the Financial Planning Association (FPA). These websites will give you specific information about CFAs, such as their specialties and fee structures. You can also use SmartAsset’s free tool and be matched with up to three CFAs that serve your area within minutes.
Another directory is the CFA Institute itself, which keeps information on all those who have passed the exam. If you find it overwhelming to just search a directory of CFAs, you can ask friends or family members if they have a CFA they would recommend. You can also ask your bank or broker, who might know of a few options.
Check the CFA’s Record
Regardless of where you find a CFA, it would be a good idea to check their record before moving forward. For example, you can check FINRA’s BrokerChecker website, which lists employment history, certifications, licenses and any violations they might have on record.
It is never a bad idea to verify that BrokerChecker shows the same certifications and licenses they say they have. Of course, you should also take note of violations if they have any. While violations are never a positive thing, they may not be cause for concern if they have a single violation from 15 years ago. But if there is a pattern of problems, it may be a good idea to move on.
Other Considerations
When considering which financial advisor is right for you, it’s important to take in as much information as possible before moving forward with your final selection. There are a couple of very important considerations that should be noted and that you can be a key part of your decision-making process.
Fee-Only vs. Commission-Based
CFAs don’t all use the same fee structure, and it’s important to know how the CFA you are considering makes money. This is because how they are paid can affect the advice they give, and this is especially true with investment advice.
For example, some CFAs may earn money on a commission basis. This means they might earn a higher commission for pushing certain stocks and mutual funds, which might be owned by their firm. It might also mean the CFA only checks in with you about making trades. Chances are, you want someone who is looking out for you, not just pushing high-commission funds.
The other option is fee-only, which can work in many ways, such as in the form of an hourly rate or a flat rate. This fee structure tends to be better for clients since the CFA’s earnings don’t depend on pushing certain investments. You can find fee-only CFAs listed on the NAPFA website, which has a filter specifically for fee structure.
Fiduciary Duty
You should also check whether the CFA you are considering has a fiduciary duty. This means the CFA has an obligation to act in the best interests of the client (you), rather than of their own or of their firm. CFAs are not legally required to be fiduciaries, so it may not be obvious whether they adhere to this standard. However, you can ask the CFA about this directly, or it may be mentioned on his or her website. Either way, it’s important your prospects adhere to it so you know their advice is always in your best interest.
Bottom Line
Finding a CFA is an important decision. Investing is one of the best ways to build wealth, but that is only the case if your portfolio is aligned with your goals. A CFA can help you select the right investments to build a financially secure future. However, you’ll want to be sure the CFA you choose has a strong background and is looking out for your best interests. Fee-only services and fiduciary duty are some of the key things to look for when choosing a CFA.
Tips for Finding a Financial Advisor
- Before working with a financial advisor, you’ll want to be sure you know what your goals are and why you need an advisor. Once this is determined, it can be easier than you think to find the right advisor for you. 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.
- Whether you need a CRA or some other type of financial professional, it’s important to know how much money you will have in retirement. With Social Security and pensions covering less of the bill these days, you will need your own savings to cover your expenses. Use SmartAsset’s free retirement calculator to estimate how much you should have saved.
©iStock.com/martin-dm, ©iStock.com/Extreme Media, ©iStock.com/shapecharge