Do I really need a 'CFP'?

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NEW YORK (Money) -- Question: I'm looking for a financial planner. Should I find one with who is a Certified Financial Planner (CFP)?

The Mole's Answer: The answer here is a definite "maybe." Let me explain what a CFP designation means, what other designations are out there, and then I'll give you my thoughts on the value of this designation.

I happen to be a CFP. I'm also only human, which means I can't completely write about the subject of CFPs without any bias. The CFP designation means that a planner has gone through the following four steps:

Education. Completed a set of courses on financial planning, or alternatively, previously achieved such designations as a CPA or attorney.

Exam. Passed a ten hour exam. I found the exam difficult, but not even in the same ballpark as my CPA exam. I needed years of therapy after studying for that, let me tell you.

Experience. Have at least three years of qualifying work in the profession.

Ethics. Agree to adhere to a set of ethics to the clients we serve.

Now by my last count, there were more than 100 financial designations. Many, like the CFP, take a significant amount of time and expertise to master before the designation is awarded. I consider some of those to be the PFS (Personal Financial Specialist) and the CFA (Chartered Financial Analyst). Obtaining these designations means that we at least have a proven level of competency within financial planning and investing.

Unfortunately, many of the others require nothing more than brief courses geared toward sales techniques; how to use emotions to sell annuities to seniors is a popular one.

Many designations are engineered to lend credibility to the planner. Cracking the code of these designations is difficult. When you see some initials after someone's name, look up that designation on the Web. Find out how difficult it is to obtain. If it looks easy, yet the planner brags about its meaning, you might want to steer clear.

So how do CFPs compare with other designations?

In my admittedly biased view, CFPs tend to be some of the better financial planners. Which is not to say that we don't have enormous room for improvement. We absolutely do.

Those ethics we say we adhere to are subject to interpretation. I did a recent interview, with the Journal of Financial Planning, where I was somewhat critical of my fellow CFPs. Putting our clients first seems to be one of those easier-said-than-done areas.

Take the CFP who sold the seven variable annuities to the senior citizen. Or another who loaded up over 3.5% in annual fees, charging his client both commissions and a 1.6% management fee. All of this was done in the name of serving the client.

We CFPs often define ethics as not doing anything illegal. But we fall short on dialogue on what's best for the client. Case in point: the last Financial Planning Association annual conference. In my view, the discussion on ethics fell short.

Having a designation like a CFP, PFS or CFA is a good starting point for picking a financial planner, but that's all it is. Our goal is to get you to like us, trust us and trust our judgment. Don't let any initials accomplish these goals for us. Ask us some tough questions such as those I suggested in "Truth or dare for your financial advisor". Don't let your advisor just tell you that your interests will always come first. Ask him for a little show and tell.

Always keep that "buyer beware" attitude, and make sure you understand what you're buying and how much you're paying for it. Remember that, just like the quality of MDs, CPAs and JDs vary, there are both good and bad CFPs.

The Mole is a certified financial planner and certified public accountant who - in the interest of fairness - thinks you should know what goes on behind the scenes in financial planning. Want to make contact? E-mail themole@moneymail.com.