What’s in an acronym? Advisors name their favorite designations

Jerry Davidse of Presilium Private Wealth and Craig Robson of Regent Peak Wealth Advisors

Advisor views designations as a 'layering process' that you can build on once you have a better understanding of client-specific needs.

Time to dig into the alphabet soup better known as financial advisor designations.

They say that an investment in knowledge pays the best interest. But they also say that time equals money. So if a wealth manager is going to take the time to pursue that extra certification – whether it’s a CFP, CFA, CPA, or any other designation – they may want some idea of which one will be worth the extra effort in terms of time, energy and money.

Ross Riskin, chief learning officer at the Investments & Wealth Institute, says advisors can differentiate themselves from the pack by investing in their own education, and more specifically, “specialization.”

“In order to become a true specialist, whether you’re working with individual clients or working as part of a big team, it’s about having deep understanding and deep learning,” Riskin said. “And that’s often best obtained by pursuing an advanced certification, just like the CIMA, CPWA or RMA, which are all offered by the Investments & Wealth Institute.”

The IWI designations traditionally have been pursued by wirehouse financial advisors, who on average work with the wealthiest clients and generate the most annual revenue per advisor in the financial advice industry.

The IWI offers three primary certifications for advisors, according to its website: certified investment management analyst, or CIMA, which costs $5,995; certified private wealth advisor, or CPWA, for $7,295; and retirement management advisor, or RMA. The RMA designation has two tiers: $2,495 for online education only, or $3,495 for self-study and a two-day event.

InvestmentNews recently reported that Edward Jones was putting cash on the table for advisors who are seeking to improve their credentials.

“Edward Jones offers opportunities to encourage financial advisors and client support teams to pursue approved professional credentials through tuition assistance, reimbursement, and supported study time,” a company spokesperson wrote in an email. The spokesperson did not respond to questions regarding the IWI designations.

“We are encouraged by how many of our colleagues have earned or are pursuing the 20-plus professional designations we support, including the CFP (Certified Financial Planner) and/or the [Chartered Financial Consultant] certifications,” the spokesperson added. “In fact, we anticipate having more than 4,500 CFP and/or ChFC professionals by the end of 2024.”

According to the 2023 InvestmentNews Advisor Benchmarking Study, entry-level support advisors with a CFP on median earned 15.7% more in traditional compensation than their peers. The next level, support advisors, earned 4.9% more. Lead advisors (the top advisory position except for firm ownership) with a CFP did not see higher earnings than their peers. That said, a majority (63%) of lead advisors hold the CFP, versus only 24% of entry-level advisors.

Put simply, the CFP is valuable to early-career advisors, and helps them rise up the ranks of an advisory firm. But once they get to the top of the advisory ladder, other factors, like specialization, will have a much larger impact on earnings potential.

ADVISORS’ FAVORITE ACRONYMS

For personal financial planning, Daniel Lash of VLP Financial Advisors, who’s a certified financial planner, thinks the CFP designation is the most important to obtain to get started. After that, advisors seeking to specialize in a particular niche can dig deeper. For example, those advisors seeking to specialize in divorce might want to pursue the CDFA (certified divorce financial analyst).

“I have the AIF designation due to the work we do with corporate retirement plans, mostly 401(k)s, but rarely if ever do prospects or clients know what the AIF is or even stands for,” he said. (The AIF, for inquiring minds, stands for accredited investment fiduciary.)

Lash says it’s rare that a prospective client will say they hired him because he has a particular designation. However, he says more prospects are asking whether he’s a fiduciary or CFP, which he attributes to the increase in CFP advertising compared to other designations.

Jerry Davidse, CEO (and CFP) at Presilium Private Wealth, agrees that the CFP designation is “by far the most important in serving our clients and growing our advisory business.” As a result, he mandates that all his advisors at Presilium Private Wealth have the designation.

“It shows that we have a deep understanding of the most important areas of financial planning and are well prepared to guide our clients through critical life decisions,” Davidse said.

Craig Robson, founding principal and managing director at Regent Peak Wealth Advisors (and a CFP, CIMA, and CDFA to boot), says the CFP designation is the most beneficial for an advisor to have as it covers a comprehensive range of consulting topics within a client’s overall financial plan design. In his view, the CIMA and CDFA designations are more tactical and should be considered after one’s practice has been established and is ready to scale.

“Think of designations as a layering process: Start with the CFP from a foundational perspective, and then build on that once you have a better understanding of client-specific needs and/or niches you would like to develop,” Robson said.

Meanwhile, Matthew D. Liebman, founding partner and CEO of Amplius Wealth Advisors (not to mention a CFA, CRPC, and CAIA), said the CFP may be the most practical and applicable designation that one can attain in the wealth management industry. But the CFA designation (chartered financial analyst) can be a great differentiator, and it’s not a bad pairing with other designations either.

“Our firm has successfully paired a CFA charterholder (me) with several colleagues who have their CFP so that clients can hopefully benefit from both,” Liebman said.

Derek Wittjohann, chief operating officer and partner at Premier Path Wealth Partners (also a CPWA and CFP in case you were wondering), says he holds the CPWA (certified private wealth advisor), which he calls “a comprehensive designation, building on the concepts of CFP, and targets the needs of the ultra high net worth, which most closely resembles our clientele.

“We use and draw from the CFA and CPWA most frequently in our ongoing client interactions and have found these to be the most impactful,” Wittjohann said.