NEW YORK (MainStreet) -- Consumers in need of a little professional financial advice have more choices than they may realize. Choice, though, can be a source of confusion."There are over 2,000 financial designations," says Joel Redmond, a certified financial planner based in Syracuse, N.Y.
|There are more than 2,000 financial designations, but fortunately, only three primary financial adviser fields consumers needs to know.|
CFPs specialize in assessing whether a person can meet life goals through careful planning. They're generally sought out by consumers interested in making sure that they have enough money for retirement, are adequately insured and/or have their assets protected. "They're generalists, but with a very high level of expertise," says Toby Johnston, a CFP and a CPA with accounting firm Mohler, Nixon & Williams. He adds that those in the midst of a serious search for a financial adviser look for the CFP acronym since it's a good indicator that person is top tier. Redmond notes, though, that while financial planners do know a thing or two about investments, they're more apt to let you know whether you can afford to take risk rather than outline which specific investment risks you should take.
The average consumer generally seeks out a CPA when they are looking for someone to prepare their taxes or simply need general tax advice. These experts also specialize in tax audits or work as corporate accountants for big companies looking to maximize their tax returns and make sure that everything is filed accurately and on time. Their in-depth knowledge of tax law has led CPAs to branch out into other specialized markets and become a mainstay at wealth management companies. For instance, CPAs are also becoming a regular go-to for small businesses, who want to "know the tax ramifications of the decisions they're making," says Sean Duncan with the Texas Society of CPAs. To become a CPA, an individual must pass a national test and be in compliance with state laws before being licensed to practice there. While the requirements vary, Johnston says most states require 150 hours of education, which means most CPAs must have the equivalent of a master's degree. They also have to spend two to three years working under the supervision of an experienced CPA before they can add the acronym to their email signature, Duncan says. Once you are a practicing CPA, you have to take 40 hours a year in continuing education to keep up on tax law and maintain your license.
CFAs specialize in investment strategies that are more advanced, more analytical and more market-centric than those CFPs or CPAs work with, but the average consumer isn't likely to run across one in the quest for financial knowledge. "There are not too many of these people working with the public," says Johnston at Mohler, Nixon & Williams. Some of this has to do with how long and difficult it is to earn this particular designation. "A