The chartered mutual fund counselor (CMFC) designation is a professional credential for financial advisors who specialize in mutual funds and related investment strategies. While it was previously administered by the College for Financial Planning, the CMFC credential is no longer offered to new candidates. Advisors who currently hold the CMFC went through an education program that covered topics like fund selection, asset allocation and tax-efficient investing, and then passed an exam.
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What Is a Mutual Fund?
A mutual fund is a portfolio of stocks and/or other securities that’s owned by a large group of investors and professionally managed by an investment manager. Purchasing shares in a mutual fund gives investors more diversity in their portfolio at a lower cost than if they were to buy shares in each stock included in the fund. The fund pays investors back in dividends based on the performance of all of the securities that are a part of the fund as a whole.
Due to the complexity of mutual funds and the number of securities each fund contains, it is important that your financial advisor is an expert in mutual funds. A CMFC designation is one mark of a mutual fund expert.
What Is a CMFC?
The CMFC is a professional credential that signifies expertise in fund selection, asset allocation, risk assessment and tax-efficient investing. While the College for Financial Planning stopped offering this credential, it continues to recognize and enforce renewal requirements for advisors who hold the designation.
To earn a CMFC designation, financial advisors had to complete a 10-week course and pass a rigorous test. Candidates were expected to understand mutual funds, asset allocation, retirement planning, risk and return and other investment topics.
To maintain their designation, CMFCs must take 16 hours of continuing education courses every two years. These courses keep CMFC designees up to date with the latest technology and developments in financial management.
Why Choose an Advisor With a CMFC Designation?
Mutual funds can be confusing, and the spread of securities in each requires an expert to keep track. Fortunately, the CMFC program provides specific education to benefit financial advisors. The course emphasizes how to evaluate mutual funds and how to use that information to make recommendations to clients. A credentialed advisor should be able to review your entire investment portfolio and then provide suggestions that give your portfolio balance and minimize your risk.
Also, the College for Financial Planning holds CMFC designees to strict standards of professional conduct. You can expect them to display integrity and professionalism, provide objective advice, be competent and protect your privacy.
If your investment advisor holds a CMFC designation but does not abide by these standards, you can report them to the CFFP. If the complaints are valid, the advisor faces the Ethical Conduct Committee and could receive disciplinary action. The CFFP publishes a list of advisors who have had their designation suspended or revoked online.
The CMFC program is the only industry-recognized mutual fund credential. It is not something a professional can just pay to join. The College for Financial Planning and the Investment Company Institute collaborated to create the program in 1995.
Other Factors to Consider When Choosing a Financial Advisor
A search for local CMFC designees will likely turn up a large number of names, considering that there are over 6,500 CMFC graduates. You should choose several to meet with before deciding on one advisor. There are several factors to consider when making this decision.
What other professional certifications does he or she hold? The CMFC is just one of many credentials financial advisors can have. The most prestigious certification is the Certified Financial Planner™ (CFP®) which can be an important credential to look for if you’re trying to narrow down your search.
What is the fee structure? Financial advisors charge an hourly fee, a flat fee or a commission-based fee. Most of the time, advisors charge a fee that’s based on a percentage of your assets under management (AUM). Each has its pros and cons, so consider which will work best for you. A key consideration is whether the advisor is a fiduciary, meaning they are required to put your best interests before their own.
Also, consider if he or she has a questionable history. You could check FINRA‘s BrokerCheck database. The database displays information about the advisor’s licensing, any filed complaints, job history and years of experience.
Finally, can the advisor walk you through a sample quarterly report? Ask for an example of their work. Have him or her show you another client’s anonymized report and explain the choice of assets and the results.
Bottom Line
A chartered mutual fund counselor can help you determine the right mutual fund investments for your portfolio. They must pass a course and test in order to be certified to help you distinguish the right aspects of a mutual fund for you and your investments. Consider working with a CMFC if you need direction on mutual funds and how to find the right funds for your needs.
Tips for Investing
- Finding the right financial advisor can do wonders for your overall investment plan. They can help you analyze potential investments, make a long-term strategy and then manage your investments. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Before deciding whether mutual funds are the right investment vehicle for you, consider the pros and cons.
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