We all grow up with a unique relationship to money. We learn from observing family and friends as well as from personal mistakes and successes about what it means to earn money and to lose it. We come to recognize what money allows us to do when we have it; and the ways in which we’re limited when we don’t. Consequently, we work hard to acquire it; we do our best to save it; and we try to find trustworthy and secure ways to help it grow.
As financial advisors, we’re particularly interested in that last part – helping your money grow – and as fiduciaries, we recognize the importance of finding an advisor who has your best interests in mind.
Perhaps the most important choice you can make, the one which will impact all others, is WHO you will trust with your money. Asking the right questions and doing the research can help you find that person.
Over the next few weeks we’ll be presenting a series of topics meant to enhance your search for the right advisor, this week’s topic being:
As it turns out, the basic qualifications needed to become a “financial advisor” are taking these two exams:
- The series 66 exam, which allows for a person to become an Investment Advisor Representative (IAR) of a Registered Investment Advisor (RIA). With this certification, you can expect a pay schedule will be Fee Only.
Cost is 165$.
100 multiple choice questions
- The series 7 exam, which allows a person to become a Registered Representative (RR) for a Broker Dealer (BD). This allows the advisor to work on a commission or transactional basis.
Cost is 305$
250 multiple choice questions
These exams can be taken independently or together, depending on where the advisor expects to work and how they prefer to make their money (more on this in another post). They are a great introduction to the financial world, and indeed are mandatory to understanding how trading & financial markets work, but you don’t need any professional or educational experience beyond this to officially qualify to be a Financial Advisor.
This is to say - the barriers for entry are incredibly low.
Many advisors go above and beyond these basic certifications to provide a more exceptional experience for their clients.
As a prospective client, investigating an advisor’s certifications helps you identify how experienced they are, whether they’ve taken the time to deepen their understanding of finances and markets, and whether their specializations align with your needs.
At Lauer Wealth, we stress an academic foundation to advising. We have worked hard to receive and maintain those certifications which we believe to be best suited to providing a comprehensive financial experience for our clients. But there are numerous specializations which advisors can pursue depending on their focus.
While we can’t get into all possible certifications in this piece, we will discuss our specializations and what that means you can expect whenever or wherever you see them.
John Lauer CFP® –
CFP® stands for Certified Financial Planner
What you can expect:
A. Completed an academically rigorous program and exam involving a comprehensive list of the diverse aspects of finance including:
- Insurance planning & risk management
- Employee benefits
- Investment planning
- Income tax planning
- Retirement planning
- Estate planning
B. Completed at least a bachelor’s degree from an accredited university.
C. Acquired at least three years of professional experience as a financial planner.
D. Maintains high ethical standards which are regularly enforced by the CFP® Board.
(to learn more about this certification, visit the page for CFP® requirements here)
John Lauer CPA, MST –
CPA stands for Certified Public Accountant
What you can expect in the state of Indiana:
A. At least 150 semester hours, with 30 of them being in accounting. Academically, this generally means at least 5 years of college education)
B. At least 2 years of supervised professional experience as an accountant.
C. Completion of the CPA exam, which demands comprehensive understanding in the following sections:
- Auditing & Attestation
- Business environment & concepts
- Financial Accounting & Reporting
(Certification requirements do vary a little by state, but not much)
MST stands for Master of Science in Taxation
What you can expect:
The MST degree takes between 1-5 years to complete, depending on the curriculum. It essentially functions as a highly focused law degree, emphasizing taxation regulation and related subjects. Graduates are prepared to help clients stay in compliance with tax law on both individual and business levels.
We believe that financial planning expertise and tax specialization go hand in hand. Taxes consume roughly 40% of most people’s yearly income so it only makes sense that those figures would fit into an overall conversation about your financial plan going forward.
We think that understanding where your advisor has specialized is a great indicator of how they will be able to help you achieve your goals and how you can be sure they’re taking your money seriously. We encourage you to get in touch with us if you have more questions about our certifications or if you need help understanding others – there are a lot out there!