Financial Certifications Explained

The finance industry (like the medical profession) is rife with people who have a string of acronyms after their name. Are more better? Which certifications should you be looking for? It depends.

AAMS – Accredited Asset Management Specialist – The AAMS is a professional designation awarded by the College for Financial Planning to financial professionals who complete a self-study program, pass an examination, and agree to comply with a code of ethics. It has been referred to as a “mini-CFP’ designation. Financial planners will use this designation if they are not a CFP.

CFP – Certified Financial Planner – The CFP designation is awarded to financial industry professionals who are dedicated to serving individuals through investments, risk management, and retirement and estate planning. It is the “Gold Standard” for financial planners. CFP’s are required to meet education, examination, experience, and ethics requirements.

CFA – Chartered Financial Analyst – The CFA credential is a qualification for finance and investment professionals that specialize in investment management and financial management of stocks, bonds and their derivative assets. CFA’s are required to meet education, examination, experience, and ethics requirements. Whereas the CFP is focused on serving people, the CFA is focused directly on investments. The majority of CFA’s work for large banks and investment firms as investment and security analysts.

CPA – Certified Public Accountant – CPA is a statutory title that is conferred to qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination. A CPA’s primary functions are public accounting and audit services. CPA’s can operate in any area of finance, but most people’s personal exposure to CPA’s are through tax preparation services.

Each designation or certification serves a purpose, but they also help you to understand the focus (or niche) of the finance professional.