The ABC's of Financial Planning
CFA: Chartered Financial Analyst. This prestigious credential is most
frequently held by institutional money managers and stock analysts. It is
issued by the Association for Investment Management and Research in
Charlottesville, Virginia, after several years of appropriate work experience
and rigorous testing. Phone: 800-247-8132 or 804-951-5499
CFP®: CERTIFIED FINANCIAL PLANNERTM. Founded in 1985, the
CFP Board confers the designation on applicants who complete a ten-hour
examination on course work completed at the College for Financial Planning
and agree to abide by its code of ethics. An indicator that one is committed
to the profession, there are more than 32,000 CFPs in the U.S. and 13
countries around the world. Phone: 303-830-7500.
ChFC: Chartered Financial Consultant. Designation earned from the
American College in Bryn Mawr, Pennsylvania, that includes meeting all the
requirements for the CLU designation plus taking three additional specialized
courses. Since its inception in 1982, more than 32,000 men and women have
met the educational, experience, and ethics mandates needed to earn the
ChFC designation. Phone: 888-263-7265 or 610-526-1490.
CLU: Chartered Life Underwriter. Since the first examinations were held in
1928, more than 85,000 have earned this designation conferred by the
American College in Bryn Mawr, Pennsylvania. Held most often by life
insurance agents, CLUs must have three years of experience in the field,
complete ten college-level courses, and sign a code of ethics. Phone: 888-
263-7265 or 610-526-1490.
CPA: Certified Public Accountant. To earn the CPA designation, candidates
must pass an extensive and rigorous examination administered by the
American Institute of Certified Public Accountants (AICPA) and receive
approval from accountancy boards at the state level. Headquartered in New
York City, AICPA has more than 330,000 member CPAs. Phone: 212-596-
Enrolled Agent: An EA has passed a test on tax law and is entitled to
practice before the Internal Revenue Service (IRS). This designation does
not indicate special proficiency in the area of financial planning.
FPA: Financial Planning Association, formed in January 2000 from the
merger of the Institute of Certified Financial Planners (ICFP) and the
International Association of Financial Planners (IAFP). Members include
"individuals and companies who have contributed to building the financial
planning profession and all those who champion the financial planning
process." Phone: 800-322-4237.
MBA: Master of Business Administration. This graduate level degree usually
indicates that its holder has a significant background in finance.
NAPFA: National Association of Personal Financial Advisors. Located in
Buffalo Grove, Illinois, NAPFA is the largest association of Fee-Only
Financial Planners (over 2400 members) and has trademarked the
term Fee-Only™. NAPFA was founded in 1982 on the idea that planning
services coupled with commission sales constitutes a built-in conflict of
interest that does not serve consumers. Phone: 888-333-6659 (FEE-
PFS: Personal Financial Specialist. This designation is issued by the
American Institute of Certified Public Accountants (AICPA) to members
who pass an examination and have professional expertise in personal finance.
It is not necessary to by a state-licensed CPA to earn the PFS credential.
Registered Representative: This designation is held by a stockbroker who
has passed a series of exams given under the authority of the National
Association of Securities Dealers (NASD). The examination does not have a
specific financial planning component.
RIA: Registered Investment Adviser. Not strictly a credential, one becomes
an RIA by submitting specified filings with the U.S. Securities and Exchange
John T McCarthy, LLC is a registered investment advisor in the states of Washington, Idaho, and Ohio. The Adviser may not transact business in states where it is not appropriately registered or exempt from registration. Individualized responses to persons that involve either the effecting of transaction in securities or rendering of personalized investment advice for compensation will not be made without registration or exemption.
John T McCarthy, LLC
The Profession of Fee-Only Financial Planning
The independent profession of Fee-Only Personal Financial Planning grew
out of the frustration of consumers who wanted to take control of their
financial lives and could not find an objective advisor to guide them or a
reliable source of education for themselves. These are every individual’s most
basic concerns when they think about creating a secure financial future for
John E. Sestina, CFP®, ChFC, started to change that in the early 1970s
when he began to offer financial planning on a fee-for-service basis, much the
same way your physician or attorney charges. He believed that tailoring the
advice to the needs of the client—not advice based on the commissions paid
on the sale of financial products—would become the wave of the future.
In 1982, Sestina and two other visionaries founded the National Association
of Personal Financial Advisors (NAPFA) to support other professionals who
wanted to put clients first and to serve as a hub for consumer financial
The NAPFA website gives you complete details on what Fee-Only means in
action, why comprehensive planning holds the greatest benefits for you, how
Fee-Only planners charge, and how to find an NAPFA member near you.
With the turbulence in today’s financial markets, NAPFA also offers a
generic sequence of what to do when financial disaster strikes with "Getting a
Handle On Your Financial Matters During Life’s Tough Times."
The People in Fee-Only Financial Planning
Fee-Only Personal Financial Planning is a growing segment of the
financial services industry right now. This profession has grown
enormously in the past few years purely by giving consumers peace of mind
through advice they can trust.
The alphabet soup of professional designations and organizations can also get
pretty confusing. I have compiled The ABC's of Financial Planning to help
you get a better handle on who’s who and how they earned it.
The Process of Fee-Only Financial Planning
Bill of Rights for Consumers of Financial Services
As a consumer of financial services, you have the right:
• To know and understand exactly what services you can expect to receive
and how they can benefit you.
• To know how the financial professional is compensated for his/her services.
• To know and understand the true costs of all services so you can make
• To know the advisor's education, experience, and professional credentials.
• To be informed about any potential conflicts of interest or disciplinary
• To know whether the professional is in compliance with state and federal
-- John E. Sestina, CFP®, ChFC
Father of Fee-Only Financial Planning, 1993