FPA supports state review of advisory designations

FWR Staff

8 November 2006

Planners' association: some designations "are essentially marketing tools". The Financial Planning Association (FPA) is supporting a rule proposed by Massachusetts securities regulator that's intended to keep financial-service professionals from using "misleading" professional designations.

There is "a bewildering number of designations currently in use in the marketplace that denote high levels of experience and expertise when, in fact, many are essentially marketing tools and nothing more," the FPA says in a comment to the Massachusetts Securities Division (MSD), the state's investment-industry watchdog.

Massachusetts is the first state to consider limiting the professional designations used by broker-dealer agents and investment-advisory representatives. The FPA says that other states considering similar limitations will be watching how things go in Massachusetts.

Baby in the bathwater

With that in mind, the FPA said in its letter to the MSD that the state agency should take pains "to develop uniform and objective criteria to ensure that meaningful designations are not included in the prohibition."

For example, the Certified Financial Planner (CFP) designation "embodies reliability and expertise because of the comprehensive education, experience and ethics requirements enforced by CFP Board ."

Last December the Washington, D.C.-based North American Securities Administrators Association, or NASAA, launched a campaign urging senior citizens to look behind the credentials of those who hold themselves out as "senior specialists."

Though "there are legitimate organizations whose members must complete rigorous programs of study, pass extensive examinations, and have practical experience in order to receive their designations, a number of entities formed in the last few years have created designations with less stringent requirements," NASAA, an investor-advocacy association, says in a 5 December 2005 press release.

The NASD's website includes a page with descriptions of financial-service designations. -FWR

Purchase a reprint of this story.