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Credential confusion: Mistaken for a CPA

Clients want their advisors to have the right credentials. They just don’t know what those credentials are.

A disturbingly high number of clients can’t name a single financial planning-related certification, according to a survey published in May by the Investments & Wealth Institute. When asked which ones they recognized, “60% of them couldn’t come up with anything,” says Sean Walters, the institute’s CEO. “These are advisory clients,” Walters adds — not members of the general public who may not be familiar with credentials needed to become a professional planner.

Yet a majority — 75% — say formal designations would be somewhat or very important in their choice of a potential planner.

The findings illustrate a hard-to-swallow fact for advisors who studied for months or years to pass the CFP exam or similar tests: Educating clients about the value of those qualifications is as important as having the acronyms pasted after their names on business cards.

The survey’s findings match advisor Jamie Bosse’s experience. Clients seem to respect her RFC and CFP designations. “Having the letters behind your name adds credibility to you automatically,” she says, “but on the flip side, they don’t know what they stand for.”

That’s why it’s important to take the time to explain them, Bosse says. She mentions her CFP designation and opens a discussion about the fiduciary standard to which she is held.

Even if they don’t recognize credentials, clients say they want their advisors to keep learning about their field — 47% said their planners should continue their professional education.

CFP? CPA?
The CFP is the most well-known advisor credential — but that is not saying much. Just 15% of respondents named it when asked for types of advisor designations, according to the survey.

Low awareness of the titles makes it easier for clients to get confused by them. Advisor Brenna Baucum, a CFP, has seen it play out in client meetings. She recalled how, during a client meeting about taxes, they mistakenly believed she was an accountant. “You’re a CPA too, can you do my tax returns?” they asked.

Advisor Brenna Baucum poses for a photo in the offices of the H Group in Salem, Oregon

She is less concerned about being mistaken for an accountant than a less-well-trained professional in her own field.

“There’s no bar you have to pass to call yourself a financial advisor,” says Baucum, who has been a planner for six years and a CFP for four years. “The term implies experience and training, neither of which are required.” But the two are considered the same “in the public eye,” she says, along with investment advisor.

“Honestly, it was disturbing how quickly I was able to call myself an investment advisor,” she says. While earning her Series 65 took just a few months, earning her CFP took two years of work experience in addition to passing the CFP Board’s exam and disclosing information about her finances, career and background.

The awareness of the CFP is getting better, she said, but “it’s certainly a challenge to differentiate” it from other credentials. “I want people to know those two things are very different,” she says.

Of the roughly 1,000 respondents to the survey, 48% had investable assets between $1 million and $5 million, 35% had between one-half million and $1 million, and 18% had $5 million or more.

The Investments & Wealth Institute has 12,500 members, four-fifths of whom are financial planners split between brokerage firms, independent firms, regional broker-dealers and banks.

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