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Choosing the Right Financial Adviser

CHICAGO — The gut-wrenching volatility in the stock market over the past few years has been a tough challenge for busy business owners and professionals. That’s probably why so many are looking for professional help in dealing with investment decisions.

Business for “financial advisers” has been booming since the 2008 market meltdown. The problem is that searching for the right adviser can be almost as difficult as searching for the right stocks.

In most states, anyone can declare himself or herself a financial adviser without the need for a license or any formal credentials, even to the point of creating an official sounding title. At most brokerage firms, employees who used to be called stockbrokers are now called financial consultants or advisers. Whatever they are called, it’s important to remember that they are essentially salesmen who earn their money by getting you to buy and sell equities.

All of this is why I feel so strongly that investors, who feel the need for professional guidance, stick with licensed professionals with designated titles awarded by legitimate organizations, and only to those who have satisfied strict training requirements such as these:


The PFS designation is awarded and administered by the American Institute of CPAs (AICPA) only to those who have first earned a currently active CPA credential.

AICPA does not license CPAs in the United States. Licenses are granted only by one of the 50 states or five U.S. territories and authorize the holder to practice as a certified public accountant in that jurisdiction. Each jurisdiction has its own requirements for becoming a CPA and taking the Uniform CPA Examination.

In order to earn the CPA/PFS designation, a currently active CPA must pass the AICPA PFS Exam, a 6 1/2-hour comprehensive multiple-choice exam utilizing case studies to emphasize the integrated aspects of financial planning. AICPA offers applicants two exam-preparation courses covering both technical topics and the professional responsibilities of a CPA doing personal financial planning.


To obtain the Certified Financial Board of Standards certification, applicants must take a registered course of study (15 undergraduate/graduate hours plus a capstone course); have a bachelor’s degree by the time they are certified; meet the board’s experience requirement (two or three years depending on type of experience); pass the board examination; be subject to a background check; agree to the board’s professional standards and ethics, including agreeing to a fiduciary standard; and be subject to the board’s enforcement process.

In order to be re-certified, a CFP must also take 30 continuing education (CE) hours over a two-year period.


The Institute of Business and Finance (IBF) course serves students from several hundred national banks, brokerage firms, insurance agencies and mutual fund companies. It consists of three modules, each accompanied by an online exam. Each exam is 60 minutes long, covers 50 questions and is pass/fail (70 is passing). The exams are non-cumulative, and there is no comprehensive exam at the end. Anyone over the age of 21 who is unrelated to the applicant can serve as a proctor for these exams.

Upon completion of the exams, the applicant is required to write a two- to five-page case study implementing all of the knowledge acquired throughout the course. The course is designed to be completed in 15 weeks, but since it is self-paced and self-study, the applicant has enough flexibility to get it done sooner.

IBF allows for a one-year maximum completion time before extension fees are assessed.


This designation from the National Association of Estate Planners & Councils (NAEPC) is a graduate-level accreditation in estate planning earned in addition to already recognized professional credentials (JD, CPA, CLU, CFP, ChFC, and CTFA) within the various disciplines of estate planning (accounting; insurance and financial planning; law; and trust services).

It is awarded by the NAEPC to recognized estate planning professionals who meet special requirements of education, experience, knowledge, professional reputation and character. To apply, one must hold one of the previously mentioned professional designations, have been in active practice as an estate planner for at least five years (15 years to be exempt from the educational requirement), provide three professional references, and be an active member in an affiliated local estate planning council.


To qualify for this CFA Institute designation, an applicant must hold a bachelor's degree from an accredited institution, or have equivalent education or work experience; pass Level 1 of the CFA exam or pass their self-administered Standards of Practice Examination; have 48 months of acceptable professional work experience in investment decision-making; and agree to adhere to and sign the Member's Agreement, a Professional Conduct Statement, and any additional documentation requested by the CFA Institute.

These five examples are typical of a larger number of financial credentials issued by qualified organizations. For others not listed here, be sure to research thoroughly before choosing one as a personal adviser.

Even after picking a qualified adviser who seems suited to your needs, there are questions you should ask such as, “How much will you charge me, and will it be on a commission or flat-rate basis?”

You should also make sure that your potential adviser is comfortable with, and will respect, your personal investment preferences such as conservative, aggressive, or capital preservation.

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations.

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Have a question or comment? E-mail our editor Dave Davis at [email protected].