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Professional Designations In Finance

10/25/10 11:47:17 AM PST
by Karen Wasserman

Ever wondered what those initials mean after the person's name? Here's a description of some of the designations that financial professionals can earn to become certified at their craft and carry some street cred -- on Wall Street, that is.

Do you know the difference between a CMT, CFA, CFTe, and CFP? How about a Series 7? For that matter, what about Series 1 through 6? If you have aspirations of going pro in the world of financial services or just want to decipher the initials after the name of the person who wants to manage your money, here is a rundown of what some of these acronyms mean and how individuals holding these designations might use them.

- Chartered Market Technician (CMT)
The Chartered Market Technician (CMT) designation is conferred by the not-for-profit Market Technicians Association (MTA). It's awarded for proficiency in technical analysis and charting based on completion of the CMT program and passage of an exam. Not an entry into any particular financial profession but rather an accredited charter, it conveys that an individual is versed in price and volume analysis and other technical approaches to the financial markets. It is well-recognized as confirmation of skill in technical analysis.

The Market Technicians Association was started in 1973 in New York by three technical analysts: Ralph Acampora, John Brooks, and John Greeley. The membership-based organization is worldwide today with more than 3,800 members in more than 74 countries; around 42 chapters worldwide; and 941 active CMT charterholders. The organization publishes the Journal Of Technical Analysis annually containing articles on technical analysis studies.

The association awarded the first CMT designation in 1989. Some of the best-known market technicians with CMT status include John Bollinger, Ralph Acampora, and John Murphy. Around 1,000 people a year apply for the CMT program, with around 750 people a year earning the designation.

The CMT program is a certification process in which candidates are required to demonstrate proficiency in a broad range of technical analysis subjects. To earn and continue using the designation, charterholders must not only pass the exam but also must meet a professional requirement and go through a sponsorship process. This helps ensure that the designation is being used properly.

Administered by the Accreditation Committee of the Market Technicians Association, the exam consists of three levels, in which 1 and 2 are multiple-choice exams and 3 is the essay portion of the exam. The three exams total 10 hours of proctored test time. Costs to the applicant include fees for each exam (levels 1-3) plus annual membership dues to the MTA (currently $300 a year).

According to the MTA, the objectives of the CMT program are to guide candidates in mastering a professional body of knowledge and in developing analytical skills; to promote and encourage the highest standards of education; and to grant the right to use the professional designation of Chartered Market Technician (CMT) to those members who successfully complete the entire program and agree to abide by the MTA code of ethics. Thus, the CMT designation is designed to reflect education, industry experience, peer review, and a commitment to ethical practice.

The CMT designation also may be used as an alternative to a portion of the Series 86 examination required of financial analysts, per a 2005 ruling by the US Securities and Exchange Commission (SEC).

Some independent traders not necessarily seeking a professional position in finance simply use the program as a source of education in technical analysis to improve their own proficiency and to meet with other technical analysts. (To see if there are any local MTA chapters in your area holding regular meetings, sometimes with speakers, visit the MTA's website.)

Many authors who contribute to our print magazine, Technical Analysis of STOCKS & COMMODITIES, hold CMT designations.

- Certified Financial Technician (CFTe)
The Certified Financial Technician (CFTe) designation is similar to the CMT designation in its emphasis on technical analysis. Administered by the International Federation of Technical Analysts (IFTA), a not-for-profit global, incorporated organization of market analysis societies and associations, the designation recognizes professional qualification in technical analysis around the world.

CFTe status is granted to IFTA members who pass two examinations that test not only technical skills, but ethics and international market knowledge as well. The first exam (CFTe I) is multiple-choice, covering a range of technical topics, and tests understanding of the principles of technical analysis. The second exam (CFTe II) is essay-based and tests depth of knowledge and experience in applying technical analysis methods. CFTe II presents a number of charts for one specific market (usually an equity) and asks the student to give an analysis based on the charts.

Topics covered by the exams are classic technical analysis techniques and chart reading and might include: bar/candlestick/point & figure/ichimoku charts; chart patterns; anticipating reversal patterns; Dow theory; Gann theory basics; Elliott wave theory; Fibonacci techniques; cyclical analysis; volume studies; breadth indicators; and sentiment indicators.

Current fees are $500 (CFTe I) and $800 (CFTe II). These exams are held in centers throughout the world and in a number of languages. The exam process and accreditation by the IFTA help ensure international equivalence for the program.

According to its mission statement, the IFTA seeks to promote the highest standards in financial-market best practice and the use of technical analysis. It requires all of its member societies to adhere to its code of ethics. "Given the nature of our profession, the importance of ethics is paramount," IFTA's website states.

The IFTA encourages the development of member societies around the globe. It provides developing societies with guidance on how to set up a local society, corporate governance, and best-practice guidelines. Once a local society has been established, it can apply for membership in the IFTA. In the United States, member organizations include the Technical Securities Analysts Association of San Francisco (TSAASF, and the American Association of Professional Technical Analysts (AAPTA, See a list of other member organizations at

Incidentally, the IFTA also offers an even more advanced program to foster and recognize accomplishment in technical analysis: a Master of Financial Technical Analysis (MFTA) ( According to the IFTA, it is intended to be a rigorous demonstration of professionalism in the global arena of technical analysis. Attaining the MFTA requires the student write an original research paper that: 1) successfully develops a reasoned and logical argument and leads to a sound conclusion supported by the tests, studies, and analysis contained in the paper; 2) adds to the body of knowledge in the discipline of international technical analysis; and 3) has practical application. The fee for submitting this paper to the IFTA for consideration of receiving the MFTA is $900.

The 23rd annual IFTA conference was recently held on October 7-9, 2010, in Berlin, Germany. The 24th annual IFTA conference is scheduled for October 6-8, 2011, in Sarajevo, Bosnia and Herzegovina.

- Chartered Financial Analyst (CFA)
Another professional designation that a financial professional may hold is Chartered Financial Analyst (CFA). The CFA designation is offered by CFA Institute, which is a global association of investment professionals and the owner of the CFA trademark.

According to CFA Institute, the CFA designation is intended to reflect that the holder is knowledgeable about a broad range of investment principles and submits to an ethical code of conduct. It is intended to be useful in many fields of investment professional specialties. Thus, CFAs could be securities analysts, money managers, or investment advisors who have completed the CFA program (as well as any other licensing exams that may be required). Unlike the CMT designation, CFA charterholders have more to do with fundamental analysis than technical analysis.

To earn the CFA designation and become a CFA charterholder, candidates must pass each of three six-hour exams (levels I, II, and III); possess a bachelor's degree (or equivalent, as assessed by CFA Institute); become a CFA Institute member; apply to a CFA Institute member society; and have 48 months of qualified, professional work experience. CFA charterholders are also obligated to adhere to a code of ethics and standards governing their professional conduct.

The three levels of exams cover ethical and professional standards; quantitative methods; economics; financial reporting and analysis; corporate finance; investment tools; asset classes; and portfolio management and wealth planning. The exams include problems, case studies, and essay questions.

Test questions for the first exam require choosing among multiple-choice answers. Sample questions could be along the lines of, "The GIPS standards require all of the following except: [choose A, B, or C]" or "Using the bond-plus-risk premium approach, the cost of equity for Company A is closest to: [choose A, B, or C]"). Level II of the exam consists of "item set questions," where different scenarios must be considered by the candidate before choosing among multiple-choice answers as he or she interprets the situation based on various compliance and ethical standards. Essay (or "constructed response") questions for level III may have the test-taker compare or contrast, describe, determine, identify, or explain the significance of a given scenario. CFA Institute has strict policies surrounding the selection of graders each year and grading is designed to minimize grader bias.

CFA candidates follow an assigned curriculum to prepare for the three levels of exams. The curriculum, a graduate-level self-study program, is updated each year to stay current. CFA candidates could be practicing investment professionals seeking the CFA credential; recent college graduates entering the investment field; people crossing over into the investment profession from other fields; and individuals looking to increase their expertise through self-study at their own pace.

The first CFA charter was offered in 1963 to 268 senior-level financial analysts out of 284 who sat for a four-and-a-half-hour exam. By 2003, there were more than 55,000 chartholders. Today, the institute recognizes more than 90,000 CFA chartholders all over the world. According to CFA Institute, more than 111,000 candidates sat for the exams in 2010, and 42% passed. As for the organization's outposts, various countries host 135 local member societies.

Some market regulators accept the CFA charter as a proxy for some licensing requirements for those who practice in particular fields. For example, the New York Stock Exchange will exempt research analysts who, among other qualifications, have completed level I and level II of the CFA exams from the analytical portion of the Series 86 exam for those seeking to practice as research analysts. And in many states, CFA charterholders may be exempt from having to take state-licensing exams for those seeking to practice as investment advisors (but not broker/dealers). In addition, some universities waive certain course requirements for CFA candidates and charterholders.

Moreover, some universities partner with CFA Institute and local CFA Institute member societies on the CFA Institute Global Investment Research Challenge. The challenge offers an opportunity for students to work with investment industry professionals in a competition. Participating universities assemble teams of three to five business and finance students who work directly with a publicly traded company in researching and preparing a company analysis. The student teams' presentations are evaluated locally by portfolio managers, research managers, and chief investment officers. Winning teams advance to regional competitions in the Americas, Asia, and Europe, and then to the worldwide finale.

Russell Rhoads, a contributor to Technical Analysis of STOCKS & COMMODITIES magazine and a CFA charterholder, describes his approach to the markets as half investing-oriented and half trading-oriented: "The emphasis in the CFA program is definitely more on long-term investing than short term, and geared toward fundamental analysis." It is a rigorous program, he said, that takes a minimum of two and a half years to complete, with only one or two chances per year to retake the exam if you fail.

"At the time I took the exam, I was working for a hedge fund firm that did not encourage getting the certification, so I had to do it on my own time at my own expense, and that can make it take longer. Some firms strongly encourage you to get the certification, believing it enhances the credibility of the firm, and so they might give you some time off to study for it. That support can make it a little easier," Rhoads explained.

"There is a whole cottage industry around exam preparation; I used one for the last level of the exam and I believe that really got me through it."

Did he find it valuable to go through the program? "Yes, absolutely, on a variety of levels," he replied. "In terms of the networking outcome, I met people in the program I otherwise wouldn't have met and made some lifelong friends. And this is a designation that gets people a lot of credibility."

Thus, what started as the Institute of Chartered Financial Analysts (ICFA) in 1959 as formed by the National Federation of Financial Analysts Societies (NFFAS), transforming into the Association for Investment Management and Research (AIMR) in 2004, and renamed to the present-day CFA Institute offers a credential that has become a popular, important, and well-recognized designation for financial analysts and portfolio managers.

Chartered Investment Counselor (CIC). The CFA designation can be a springboard for other things. For example, if you wish to go on to become a Chartered Investment Counselor (CIC), you can pursue this status through the Investment Adviser Association (IAA). This CIC designation is only open to individuals who have already attained (and therefore passed the exams for) the CFA designation. Founded in 1937, the IAA is a not-for-profit organization that represents the interests of SEC-registered investment adviser firms. More information on the CIC designation and the IAA can be found at its website,

- Certified Financial Planner (CFP)
Generally speaking, financial planners perform a wide array of services for investors. The idea is that they help the individual investor take stock of his or her assets and define goals in order to map out a strategy. Planning must give consideration to the investor's timeline, special needs, and lifestyle. The planner may need to take into consideration investments, saving rate, insurance and taxes, retirement, and estate planning. Planners should have a good understanding of how all these different areas may affect or contribute to an individual's financial goals.

Technically speaking, financial planners don't need any particular credentials to practice. However, it is helpful to the consumer if they do. One of the best-known designations that a financial planner can have is Certified Financial Planner (CFP). (The term "Certified Financial Planner" and the acronym "CFP" are service marks owned by Certified Financial Planner Board of Standards Inc.)

The CFP Board states on its website that it seeks to help identify those financial planners who are committed to competent and ethical behavior. To attain the CFP credential, candidates must take extensive exams in the areas of financial planning, taxes, insurance, estate planning, and retirement planning. CFP professionals must also complete continuing education programs each year to maintain their certification status.

For those who are considering seeking the CFP credential or for those who want to know what qualifications the CFP credential may contribute to a planner you are interested in using, here is a rundown of the requirements that CFP candidates must fulfill:

Education: CFP professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum approved by CFP Board. Other options for satisfying the education component include submitting a transcript review or previous financial planning-related course work to CFP Board for review and credit, or showing the attainment of certain professional designations or academic degrees.

Examination: CFP practitioners must pass a comprehensive two-day, 10-hour CFP certification exam that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits and retirement planning, estate planning, investment management, and insurance.

Experience: CFP professionals must have three years' minimum experience in the financial planning process prior to earning the right to use the CFP certification marks. As a result, CFP practitioners possess financial counseling skills in addition to financial planning knowledge.

Ethics: As a final step to certification, CFP practitioners agree to abide by a strict code of professional conduct. The CFP Board also performs a background check during this process, and each individual must disclose any investigations or legal proceedings related to their professional or business conduct.

Ongoing requirements: Once certified, CFP practitioners are required to maintain technical competence and fulfill ethical obligations. Every two years, they must complete a minimum 30 hours of continuing education to stay current with developments in the financial planning profession and better serve clients. Two of these hours are spent studying or discussing CFP Board's Code of Ethics or Practice Standards. In addition to the biennial continuing education requirement, all CFP practitioners voluntarily disclose any public, civil, criminal, or disciplinary actions that may have been taken against them during the previous two years as part of the renewal process.

Given this set of requisites, the CFP designation may help provide some assurance of a financial planner's competency.

Financial planners can have numerous other credentials as well. These may signify a particular area of expertise or interest for the planner. The list touches on different aspects of the planning field. Sample designations include Accredited Estate Planner (AEP), awarded by the National Association of Estate Planners & Councils; Accredited Financial Counselor (AFC), awarded by the Association for Financial Counseling and Planning Education (AFCPE); Accredited Tax Advisor (ATA); Certified Divorce Financial Analyst (CDFA); Certified Trust and Financial Adviser (CTFA); and so on. However, these designations are separate from the CFP designation -- not awarded by the CFP Board -- and can be more narrow than the CFP designation.

Such other credentials, licenses, and areas of expertise can affect the specific services offered by a financial planner. For example, planners who sell insurance or securities products as part of their planning services must have the appropriate licenses and be registered. Meanwhile, some planners offer advice only in specific areas such as estate planning or on tax matters, since they can be attorneys, insurance agents, or licensed securities dealers by background.

Who might use a professional financial planner? Consumers facing changes in their lives (such as births, deaths, divorce, or education expenses) or who feel they don't have the expertise or time required to fully evaluate their own financial situation might benefit. If you do use one, be sure to find out exactly how the planner is remunerated for his or her services (hourly fee, flat rates, percentage of assets, commission from products sold, or combinations thereof), how decisions will be implemented, and how long the plan will be overseen. Such crucial details should form part of a written agreement.

Anthony Trongone, another contributor to STOCKS & COMMODITIES, holds CFP and CTA certifications. He didn't end up practicing as a financial planner, instead taking up daytrading. However, he says he benefited from the program even for his own financial planning, retirement planning, and budgeting. In addition, he said going through the program "really ignited a flame" for him and spurred him toward other continuing-education pursuits and other certifications. Would he recommend the program to others? "It can open up a whole new discussion for you," he commented. "The great thing about it is there's a test at the end, which makes you get involved.

"Since the program covers five major areas of financial emphasis [accounting, estate planning, investment, insurance, and retirement planning], it gives you tremendous diversification. And for some, this also provides a good foundation to specialize in one of these areas."

Trongone also remarked that the value of such credentials in financial fields has a lot of importance around the world, since a well-regarded designation carries a lot of weight abroad. For example, in China, where Trongone has been teaching executive-level MBA classes, such designations can really set you apart and greatly increases your prospects for employment, he noted.

As for the CFP credential, he said, it "is beneficial to the public too, because if there's a problem, you can go to the CFP Board with it."

Consumers can use the CFP website at to search for a Certified Financial Planner by zip code; request a free kit on financial planning; or make a complaint against a Certified Financial Planner professional.

- Commodity Trading Advisor (CTA)
If it's commodities and futures that you wish to advise clients on (or are seeking someone to advise you about), then a CTA designation is what you need in the US. The conferring agency is the National Futures Association (NFA), an independent, self-regulatory organization for the US futures industry. The NFA develops rules, programs, and services to promote market integrity, protect investors, and help its members meet their regulatory responsibilities.

Futures trading advisors who advise more than 15 people; who advertise their services to the public; and who want the option of profiting from giving that advice must register with the Commodity Futures Trading Commission (CFTC) as a professional Commodity Trading Advisor, according to the Commodity Exchange Act. Registration of CTAs is handled through the NFA.

The NFA is funded through membership dues and fees, not taxpayer money. Membership dues to the NFA for CTAs is $750. The application fee to apply for CTA status is $200. As of June 2010, total membership in the NFA is 3,749; CTAs registered with the NFA total 975.

What constitutes advising clients? If you manage or exercise discretion over customer accounts, or exercise trading authority over a customer's account, or give advice based on knowledge of, or tailored to, the customer's particular account or trading activity for the buying or selling of futures contracts (or options on futures), then you or the firm that provides this advice must be registered with the NFA as a CTA.

How does an individual advisor qualify for CTA status? Prospective CTAs must pass the Series 3, which is the National Commodity Futures Examination (NCFE), within two years preceding their application to the NFA. (Certain exemptions may apply in some cases if alternative proficiency requirements have been met, and for some, a Series 31 or 32 can substitute, depending on the type of business the individual will conduct.)

What do you have to know to pass the Series 3? Here are some of the major subject areas covered on the exam: futures trading theory (hedging theory, speculative theory); basic functions (market structure in normal and inverted markets, contract construction, order types, and so on); futures and option terminology (scalping, bucketing, convergence, discount, deferred, synthetic, and more); margin requirements; settlement and delivery; option assignment; technical analysis, fundamental analysis, and interest rate analysis; spreads; and other topics.

As mentioned previously, Anthony Trongone has both a CFP and a CTA. Which does he find the most useful? As a daytrader, he said, "The CTA. Because it's closest to what I do -- that is, commodities trading." He continued, "Commodities are a great foundation for investors. Investors don't realize how much commodities move the equity market. If you know what to look for, it can improve your forecasting ability when trading the equities markets."

He added, "CTAs are rare; there aren't that many of them. And the test to get certified as a CTA is very demanding. The rapid-fire test questions taught me skills in handling pressure, adapting to new situations quickly, and time management. I found that to be a very valuable experience."

Directories of all currently registered and pending CTAs are available from the NFA for $15 (electronic copy) or $30 (print). Alternatively, investors can confirm whether a particular individual or firm is registered with the CFTC and an NFA member via the Background Affiliation Status Information Center (BASIC) at the NFA's website.

If you bump into a financial professional with a title such as financial analyst, financial advisor, financial consultant, financial planner, investment consultant, or wealth manager, keep in mind that these are job titles or generic job descriptions, not certified professional designations per se. Such titles in and of themselves do not require any specific certification by a third party. It is certainly possible that financial professionals with such titles do carry some sort of certification, but confirmation of that would be necessary.

Look for the initials after the person's name, not just the job title, to get the full story on their credentials and areas of expertise. Then check the certifying organization to verify it and to also check that the person is in good standing with the organization. Beyond that, it is still worthwhile to ask a prospective financial professional about his or her background, education, work history, experience, registrations or licenses, and disciplinary history before choosing one to serve your financial needs. The SEC website and Financial Industry Regulatory Authority (FINRA) website both offer valuable information, advice, and links for the consumer, as well as information on obtaining financial credentials yourself. Some of the resources at these sites include a database of professional designations; the FINRA BrokerCheck site for researching the background of a brokerage firm or broker (registered representative); and the relatively new website providing guidance to the investing consumer.

Finally, realize that there are numerous certifying bodies and dozens of designations in the industry. Some are more comprehensive and better known, while others are specific to a narrow function (for example, numerous accounting designations serve areas of specialty in accounting). Still others could carry less credential or even be self-conferred. A check with the SEC, FINRA, NFA, or appropriate state authority can help verify the verifier (that is, verify the certifying organization in order to check the legitimacy of a designation).

Realize also that such designations like those discussed here are separate from any licenses that practicing financial professionals may need to obtain from state governments or federal bodies in order to practice in certain fields or sell certain products. A list of exams available for obtaining licenses in the securities industry, commonly known as "Series" licenses, is available from FINRA. Other types of licenses, such as in the insurance industry, may be provided by state authorities.

Attaining credentials such as these does more than increase the holder's boasting rights; there are some benefits to the public too. Such designations can offer consumers some assurance of a practitioner's competency and provides some means to track a practitioner's record. Such programs also help raise the standards for the investing industry by promoting continuing education and by enforcing codes of ethics.

Benefits to the holder are significant as well: Holders of these credentials gain continuing education by way of studying for the required exams and by shared information from the overseeing organizations. And of course, designees gain some status in the industry and recognition for their expertise. In many cases, they also gain a supportive community of professionals by way of the conferring association.


Karen Wasserman

Karen Wasserman can be reached at

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