Those confusing professional designations

I’ve been complaining for years about the ridiculous proliferation of professional designations in the financial-services industry.

You’ve heard of some of them, but you probably don’t know that there are now nearly 100 professional designations! And none is bestowed by federal or state regulators. Thus, these so-called designations don’t really mean anything.

It’s not like M.D. for doctors, Esq. for lawyers or CPA for accountants, which are all state-regulated. The holders of those degrees or designations go through many years of government-required schooling at accredited institutions and undergo exhaustive examinations by independent accreditation and licensing boards.

This is not the case in the financial-services industry, where many designations are earned through self-study programs. Sure, some do offer classroom training ‘ a whole eight hours. Other designations can be attained simply by taking an open-book exam, which is virtually impossible to fail. Some certifications don’t require any testing at all ‘ you simply need to have been in the field for a few of years and undergo reference checks.

Probably the best known is the, the ‘Certified Financial Planner (registered trademark). (Display of the registered trademark symbol is required by the mark’s owner. Imagine doctors carrying cards that say ‘John Doe, MD (registered trademark).’) Yet neither it nor any of the other designations ‘ nor the organizations that offer them ‘ is regulated, and there are no industry standards for attaining or using any of these titles. It’s gotten to the point where some unscrupulous organizations now offer designations strictly as marketing tools. Insurance and investment salesmen pay a fee so they can call themselves ‘Certified Poobah,’ or whatever, and slap impressive-looking initials on their business cards. All this is simply to help them look like experts, lulling customers into a false sense of confidence so the salespeople can make an easy sale.

Federal and state regulators are fed up with it, and rightly so.

Ten years ago, I listed 89 designations just to demonstrate how absurd it is.

I, myself, hold six professional designations: CFS, RFC, CMFC, CRC, BCM and QFP. It’s so silly that several years ago I made an editorial comment by adding a seventh to my business card: EIEIO. When people ask me about that certification, I tell them it’s offered by some old farmer.

Some regulators have recently created rules regarding the use of designations. Massachusetts has barred the use of ‘Certified Senior Adviser’ after learning of abuses perpetrated by advisers touting that credential. Nebraska is making similar overtures, and other states will follow suit.

All this is healthy for consumers, but I would like to see the regulators take a more radical step: Ban the promotional use of designations altogether!

I’ve done this at my own firm: We no longer use designations on our business cards, our stationery or on our Web site.

Thus, clients will no longer see my six designations alongside my signature on letters or on my business cards. Sadly, this also spells the demise of EIEIO ‘ RIP.

The fact is that you don’t have to hold a designation to be a talented adviser. I know many people who ‘ despite their lack of designations ‘ have been providing outstanding financial advice to consumers for 25 years.

At the same time, I’m not saying that I believe designations are worthless ‘ quite the contrary; undergoing the study and training that many accredited establishments offer can indeed boost the skills and knowledge of advisers. The problem is that many advisers obtain designations to boost their marketing capabilities rather than their planning skills. And with no standards or quality consistency, consumers can’t be sure what a given designation is conveying. None of the designations is free of this problem.

Of course, I remain fully committed to ongoing training and professional development to boost our knowledge and expertise. We will continue to obtain designations and hold the ones we’ve already attained. We’re simply not going to brag about them on our business cards or brochures in an effort to convince someone to become our client.

Financial Adviser Ric Edelman is the author of several best-selling books about personal finance, including ‘Ordinary People, Extraordinary Wealth’ and ‘Discover the Wealth Within You.’ You can e-mail him at [email protected].