Financial Designations

The designations that are most respected and recognized by the financial industry and the media include:

Certified Financial Planner (CFP)
This is perhaps the most widely recognized credential in the financial planning industry. The media has promoted this designation over most others for years, primarily because of its unbiased approach to teaching the financial planning process and the rigorous certification requirements that are administered by the CFP board. The academic requirement consists of five courses covering insurance, estate, retirement, education, tax and investment planning plus ethics and the financial planning process. Once that is complete, students must sit for the board exam. This is a 10-hour, 285-question test that spans two days and includes two comprehensive case studies. Once a passing grade has been achieved, prospective certificants must also complete at least three years of professional experience plus a bachelor's degree in order to obtain the CFP designation.

Certified Public Accountant (CPA)
The CPA is by far the oldest and most established financial credential in America. CPA requirements vary by state but generally you will require 150 semester hours of undergraduate level courses plus a bachelor's degree or higher in order to sit for the 19-hour, two-day exam. There could be other requirements such as a minimum number of credits in accounting and business, or even business law. Check with your state's board of accountancy for the most up to date requirements. This comprehensive exam covers accounting, auditing, bookkeeping, taxes and ethics, among other topics. The CPA designation has long been widely recognized by the public as the definitive credential of tax expertise.

Enrolled Agent (EA)
This is a lesser tax designation often obtained by those who focus on preparing income or estate tax returns. The special agent exam administered by the Internal Revenue Service (IRS) is broken down into four three-hour sessions spanning two days. The test covers personal, estate and corporate taxes, as well as ethics and Internal Revenue Service regulations, but does not include straight accounting, auditing or bookkeeping of any kind. It could perhaps be said that the Enrolled Agent designation allows tax preparers to roughly equate themselves to CPAs within the specific confines of tax preparation.

Chartered Life Underwriter (CLU) and Chartered Financial Consultant (ChFC)
Both of these designations were originally created by the life insurance industry. The CLU designation requires the same five core courses as the CFP designation, plus three additional elective courses. The ChFC designation has the same requirements, except that it tends to embrace general financial planning issues as opposed to the CLU, which focuses more closely on life insurance and its laws and regulations. There is no comprehensive board exam required for either credential.

Certified Employee Benefit Specialist (CEBC)
As the name implies, this designation is designed specifically for those who sell or administrate employee benefit plans. The curriculum for this designation consists solely of eight courses covering various business, insurance, retirement, pension and regulatory topics. No comprehensive board exam is required. Like the CLU or ChFC, much of the material in this coursework is also covered in the CFP curriculum.

Registered Health Underwriter (RHU) and Chartered Property Casualty Underwriter (CPCU)
These designations denote mastery of each of their respective lines of insurance. Each designation requires the completion of several courses of intensive academic study, but as with the CLU, ChFC and CEBC there is no board exam. Generally, these designations are only earned by those who intend to spend the duration of their careers focusing on health or property-casualty insurance.

Chartered Financial Analyst (CFA)
This designation is generally considered to be one of the most difficult and prestigious credentials in the financial industry, at least in terms of investment management. The academic requirements for this designation are second only to those for CPAs. Three years of coursework must be completed that covers a range of topics and disciplines such as technical and fundamental analysis, financial accounting and portfolio theory and analysis. Those who earn this designation often become portfolio managers or analysts for various types of financial institutions. Holders of these credentials, like CPAs, tend to be compensated chiefly by salary with performance-based incentives (if they take corporate jobs), or from business revenue, for those who start their own private investment management companies.

This designation is offered by the CFA Institute (formerly the Association for Investment Management and Research [AIMR]). To obtain the CFA charter, candidates must successfully complete three difficult exams and gain at least three years of qualifying work experience, among other requirements. In passing these exams, candidates demonstrate their competence, integrity and extensive knowledge in accounting, ethical and professional standards, economics, portfolio management and security analysis. ((For more on obtaining a CFA designation, click here.)

CFA charterholders tend to be analysts who work in the field of institutional money management and stock analysis, not financial planning. These professionals provide research and ratings on various forms of investments.