MAKING CENTS: Decoding alphabet soup when it comes to financial advisors

Earlier last week, a friend poked fun of my email signature because of all the initials after my name. 

Lots of professionals use designations in their signature; some recognizable and some not. The question you need to ask is whether the initials, (AKA credentials or designations) are necessary and would a credentialed professional deliver better service and results than a non-credentialed professional?

Of course, the answer is maybe.

I know professionals within every area of personal finance, law and accounting. Some are great at what they do and others are not. Some have advanced designations and credentials, and some do not. While I am a big fan of credentials and designations, the lack thereof are not grounds for divorce from your current professional service providers.

Bottom line is that even the professionals with designations, degrees or credentials that you recognize often specialize within their broad profession – so learn about their areas of expertise before you blindly hire one because of the credential.

In the financial world, there are way too many designations for anyone to know what each one of them means. Some, while not widely known are very rigorous and demanding. Others, however, are simple course work with no continuing requirements to stay current and no ethics requirements. In fact, many states even prohibit the use of certain designations because of their lack of rigor. Rigor is generally determined by the quality of the educational institution, and evaluated by any continuing education requirements and/or ethical standards of conduct that must be followed.

Designations that showcase one as a specialist in the area of assisting senior citizens has generated a lot of attention amongst regulators and compliance officers of larger firms. Elder financial abuse is high on the list of regulators, and alerting the public about designations that lack merit is a good step in avoiding abuses.

For advisors with no designations or credentials, ask why not? Dig a little deeper and ask how they stay current on new trends and laws, and what guides their ethical behavior.

For advisors who do have designations, ask for a detailed explanation of each one. Find out about the examination requirements and learn about the experience requirement. Ask who provides the training. Ask about the continuation educational requirements. Ask about the ethics and policing. Any credential worth touting should have a rigorous code of ethics and standards of conduct and the authority to enforce the rules.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial. Member FINRA/SIPC. He can be reached at 781-849-9200.