Don’t be Snookered by Investment Credential Alphabet Soup

Please do not fall for the kind of manipulation examined in the attached Wall Street Journal article. There are only a handful of investment credentials that add value and even fewer that relate directly to the knowledge and experience required in portfolio management.

The CFA designation is one of the most difficult designations to earn and relates directly to portfolio management. And, there is a culture of ethics that permeates the CFA program and membership in the CFA Institute that some believe relates to the difficulty of earning the charter. Few charter holders would risk losing the designation–after working so hard and long to earn it–by resorting to unscrupulous behavior for short-term gains. If your mutual fund manager says he (or she) has no desire to earn the CFA designation, move your money to someone else because he or she is probably not telling you the truth.

However, as indicated by the lawsuit described in the article against Carl Wyllie, CWP, FICF, LUTC, a stock broker, I suspect that this manipulation may be more of an issue with respect to brokers–primarily salespeople who are recruited to join brokerages because of their silver tongues and presentable appearances (including ”credentials”)–than it is for portfolio managers who rarely appear in front of retail clients.


Just when Americans seem more desperate than ever for trustworthy investment advice, financial advisers are brandishing a baffling array of new credentials—some of which can be earned with minimal or no study and a few hundred dollars.

Increasingly, say regulators, financial advisers are using these dubious designations as marketing tools to win the trust of older, wealthier clients, in hopes of selling high-fee investments that aren’t appropriate for them…

…In recent years the number of financial credentials has soared. According to the Financial Industry Regulatory Authority, which oversees how investments are marketed to the public, there are at least 95 different professional designations for financial advisers—nearly double the 48 it listed in 2005.

The Wall Street Journal has found at least 115 others that aren’t tracked by Finra…

…The certified retirement financial adviser, or CRFA, for example, sounds similar to the CFA designation. But the CFA requires roughly 900 hours of study in accounting, economics, ethics, finance and mathematics, and only 42% of candidates pass its three required exams, a process that can take several years.

The CRFA, by contrast, requires that students pass one exam consisting of 100 multiple-choice questions, for which 40 to 75 hours of preparation is typically sufficient preparation, says Lynda McColl, a spokeswoman for the Society of Certified Retirement Financial Advisors, which grants the CRFA designation.

Read the whole thing at: (Subscription required)


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