Are you looking for a new career in finance? Or do you just wonder what all those three letter acronyms mean that people throw around? Here is a quick summary of some of the most popular financial career acronyms, and how to become one yourself.
How to become a CFP ?- A Certified Financial Planner is a certification mark for financial planners and in the United States is governed by the Certified Financial Planner Board of Standards. Financial advisers work either independently or through firms that sell financial planning advice, and programs. The detailed steps to become a CFP are listed on their website, but the summary is:
- Obtain a bachelor’s degree in any discipline, plus complete the CFP board registered curriculum.
- Pass the 10 hour CFP Certification Exam.
- Have at least 3 years experience in the financial planning industry.
- Pass a mandatory background check.
How to work as a financial planner? – Surprisingly enough, completing the CFP certification and passing the exam does not give you the right to work in the industry. In fact a large percentage of financial planners in practice today have no official CFP designation. To practice as a financial planner, and be licensed to sell financial products, it is necessary to pass the Series 7 exam. From the SEC website, “Individuals who want to enter the securities industry to sell any type of securities must take the Series 7 examination—formally known as the General Securities Representative Examination.” The detailed information for taking the Series 7 are listed on the FINRA website. For those considering financial planning as a career, it may be more cost effective to skip the costly CFP program and apply directly to a financial planning firm for sponsorship, and prior to taking the series 7 exam. After passing the series 7 exam, it is always possible to complete the CFP program as a suplement to your education and business card listed credentials.
How to become a CFA? – The chartered financial analyst program is governed by the CFA Institute. It is a 3 year self study program that requires taking and passing 3 financial theory intensive exams over a 3 year span. It is best to have a strong finance and/or economics background before attempting this track. The types of jobs that a CFA or CFA candidate would target would be investment consultant, fund manager, financial risk manager, wealth manager, or similar.
How to become a registered investment advisor (RIA)? – An RIA is very similar to a financial planner, but it is not licensed through FINRA. RIA’s are indpendent advisors who generally work on their own, and outside of the control and limitations of larger financial firms. Whereas financial planners are licensed through FINRA, RIA’s are generally licensed through a state.
How to become a CPA? – A CPA is a certified public accountant. While it’s not necessary to hold the CPA designation to practice accounting, it will add an additional layer of credentials that can earn you a much higher salary. The general requirements to earn the CPA designation are:
- A bachelor’s degree, and
- 24 semester credits in accounting and 24 in business
- Passing a uniform CPA exam
- Passing an ethics course
- 2 years general accounting experience supervised by a licensed CPA
How to become a CTA? – A commodity trading advisor is someone (or a firm) that gives people advice on options and futures for a fee. They may also run managed futures accounts for clients on a fee basis. CTA’s are regulated by the Commodity Futures Trading Commission. CTA’s are required to be members of the National Futures Association (NFA). And in order to practice, a person must pass the series 3 commodity and futures exam, administered by FINRA. d
Pass series 3 commodity and futures exam. Link to www.nfa.futures.org Mention 15 client exemption that allows trading for others without license (up to 15 clients). (http://nvcatoday.nvca.org/index.php/hedge-fund-registration-legislation-introduced-in-congress.html) Link to www.managedfutures.com Benefits of managed futures vs hedge fund (segregated accounts, no lockout period, easy to revoke power of attorney)
How to become a CPO? – From the NFA website, a Commodity Pool Operator is “an individual or organization which operates or solicits funds for a commodity pool; that is, an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or options on futures, or to invest in another commodity pool” . To conduct business with the public, CPO’s must be registered members of NFA. Other than registration and abiding by the CFTC rules, there are apparently no special certification exams required to be a CPO. But
How to become a CLU? – A Chartered Life Underwriter is someone who specializes in life insurance and estate planning. The official CLU designation is managed by The American College. The detailed requirements are shown on the American College page. In general, it requires taking 8 courses (5 required, 3 elective), having 3 years industry experience, adhering to a code of ethics, and take 30 hours of continuing education every 2 years.
How to become a CMT? – A Chartered Market Technician is someone who studies and trades the markets based on a purely technical approach. The designation is managed by the Market Technicians Association. Becoming a CMT requires passing 3 technical analysis exams within a 5 year period, and demonstrating 3 years of applicable work experience.
How to become a CEO? - Seth Godin commented in his book The Dip that “It’s easy to be a CEO. What’s hard is getting there. There’s a huge Dip along the way. If it was easy, there’d be too many people vying for the job and the CEO’s couldn’t get paid as much, could they?” The larger the organization, the more difficult it will be climbing the ladder to becoming a CEO. There are no hard and fast rules, but it helps to have an MBA from a top school, be well connected with the leaders of your organization, and possess the personal skills and qualities that are shared by other CEO’s. If you are serious about rising to the top and becoming a CEO, check out Jeffrey Fox’s book, How to Become CEO: The Rules for Rising to the Top of Any Organization.
How to become a CFO? – A chief financial officer of an organization is a highly paid executive whose main responsibilities are to manage financial risks of the business. There are no certifications for becoming a CFO, and those that attain this mark have done so by selling themselves into the position, or working their way up the ladder. According to the Journal of Accountancy website, CFO’s “need need a broad range of skills beyond knowing the ABCs of accounting”. They also recommend becoming a CPA first, getting a lot of corporate experience, and making your CFO desires known to the CEO. Sam Molinaro, the former CFO of now bankrupt Bear Stearns, and completely derelict in his duties of managing risk, was once quoted as saying “The revenue-generating capacity of this franchise has not been permanently impaired”. Similar quotes, along with the typical “We are well capitalized” has been the CFO cheer of most financial firms during the financial crisis of 2008 – usually days or weeks before begging for taxpayer funded bailouts. You want to become a CFO? Find a blackboard, and write “We are well capitalized!” 10 times, and you are hired.