Financial Planner Designations and Annuity Licenses: Is Your Retirement Professional Qualified?

I find it a bit surprising how infrequently my clients ask about my specific qualifications. I’m perfectly happy to share them, of course, but people rarely ask. It’s strange because retirement planning is probably one of the most expensive undertakings many people will face. Despite that, they don’t necessarily do the same research that they would when looking for any other professional in any other specialized field.  You wouldn’t, for example, go to a doctor whose only qualification for practicing medicine was life experience, but many will go to a financial professional who boasts that same level of experience.  

The title of “personal financial planner” is expected to grow by 30% through 2025, which is why people really need to understand who is qualified to give them financial advice.1 Certifications and professional designations can help show a financial professional’s level of expertise.

It’s important to note that there are differing types and levels of education and licenses that financial professionals may hold, which determine the products and services they can offer. An insurance agent can sell you insurance and annuity products, and they earn a commission on each sale. A registered representative who works through a broker/dealer can sell you investment products, and they too will generally earn a commission on each product they sell. A financial planner is able to offer you financial, insurance and investment advice, generally by charging a flat or hourly fee for service, or as a percentage of assets that they manage for you.

What Being A Certified Financial Planner Designee Means

Some financial professionals choose to earn their Certified Financial Planner (CFP) designation to show they have taken additional coursework to gain a higher level of understanding of managing finances over a lifetime.2 This is often considered the gold standard of financial planners because of its stringent requirements. To meet this requirement, the candidate must show proof that they have completed a CFP Board-registered education program or have one of the following existing designations or credentials:

  • Doctor of Business Administration
  • Certified Public Accountant (CPA)
  • Ph.D. in business or economics
  • Licensed attorney
  • Chartered Financial Analyst (CFA)
  • Chartered Financial Consultant (ChFC)
  • Chartered Life Underwriter (CLU)

As you can see, fulfilling the educational requirement of the CFP requires quite of bit of classroom training. However, that high level of education isn’t enough. To officially be a CFP designee, candidates must also pass the two-day, 10-hour CFP certification exam.

While being a certified financial planner designee isn’t required to give financial advice, it’s generally a very good indication that your financial planner has a high level of knowledge regarding the industry. On top of this certification, there are also certain licensing requirements that aren’t optional and are required to sell any financial product.

The Licensing Requirements For Selling Annuities

To sell financial products, a license is required. This is true regardless of whether the product sold is considered insurance (like life insurance or fixed annuities) or an investment (like stocks or variable annuities). Which product is being sold will determine the specific license needed to sell these items legally.

In the case of selling fixed annuities and annuities with life insurance provisions, an insurance license must be issued at the state level to show that the individual has passed an exam, obtained the right educational criteria, and is completing continuing education requirements. The requirements for selling insurance products vary at a state level. When meeting with a new financial professional, be sure to ask about their specific licensing information. In many cases, you can find out information regarding their license, such as if it’s active, revoked, or inactive, by looking them up on your state’s insurance licensing website.

Investments are different because these are handled and overseen not at the state level but the federal one. Someone who wishes to sell anything with an investment component, like a variable annuity, will need to be registered with the Financial Industry Regulatory Authority (FINRA).

The most common securities registrations include a Series 6 or Series 7 registration. A Series 6 registration allows representatives to sell packaged securities, like mutual funds, while a Series 7 allows them to sell a much broader range of securities. In the event that you are dealing with someone selling securities, it’s important to check the FINRA website to find out if their registration is current and in good standing.

If you’re looking for a qualified financial professional, Retirement HQ can help. All the financial professionals in our network undergo extensive background checks, which includes verifying their insurance licenses and their security registrations as applicable. That way, you can ensure that the financial professional you’re talking to has the right qualifications to help you plan for your retirement.

Show 2 footnotes

  1. “Financial Planner Job Outlook,” Bls.gov, U.S. Bureau of Labor Statistics, accessed May 6, 2016.
  2. “CFP Requirements,” CFP.net, Certified Financial Planner Board, accessed May 6, 2016.