According to the Federal Reserve, it looks as if the recession is over. Whether that's true or not, the stock market seems to be rebounding after last year's debacle. The Dow Jones Industrial Average (DJIA) started at 8,776 on Jan. 1, 2009, dropped below 6,500 on March 6 and began its climb to a close of 9,789 on Sept. 28, 2009. And this doesn't even represent its highest closing of the year. The DJIA has risen 11.54 percent for the year. The return from March 6 to Sept. 28 is an impressive 50.6 percent.
With all this good news, you would think that now is the perfect time to get back into the market. We do seem to be on a roll, but is it really time to put your cash back into stocks? Jumping back into the market could be wise, but there are still plenty of investments out there on which you can lose money. So how do you decide what to buy? Blind luck is probably not advisable. You might want to research the myriad of investments and make an informed decision. Or, you can turn to financial professionals for advice.
If you choose to turn to a specialist, who might that be? It seems simple, really; just go online or to the phonebook to find an investment adviser to interview. The problem is that everyone seems to have initials behind their name and you might not know what those initials mean. This article will help you decipher the choices so you can make an informed decision.
Certified Public Accountant (CPA)
That's us. The CPA designation does not authorize us to give investment advice; however, we are highly skilled in personal finance. That makes us an invaluable part of the overall financial healthcare team. With our expertise in personal finance and income tax, we can help you chart the proper financial course. We are also held to very high educational, ethical and experiential standards to obtain and maintain our licenses.
Certified Financial Planner (CFP)
Certified Financial Planner certificants have met the requirements of the CFP Board. These include education, examination, experience and ethical standards. To maintain a high degree of competency, a CFP must complete a certain amount of continuing education and meet the CFP Board's biennial certification requirements. Additionally, like CPAs, they voluntarily submit to a regulatory board.
Chartered Financial Analyst (CFA)
Like the CFP or CPA, a Chartered Financial Analyst has completed an extensive course of study. Their program is a graduate-level, self-study curriculum and examination course that covers a broad range of investment subjects. CFAs are held to high ethical standards and are regulated by the CFA Institute.
Chartered Financial Consultant (ChFC)
A ChFC is a financial professional who has completed The American College's eight-course program and met applicable experience requirements. These individuals have also agreed to uphold strict ethical standards.
An investment adviser is an individual or firm that is compensated for advising clients on appropriate investments (as part of a regular ongoing business). These advisers must register with the Securities Exchange Commission (SEC) and appropriate state agencies. Investment advisers are allowed to recommend stocks, bonds, mutual funds, partnerships or other SEC-registered investments to clients and are highly regulated. These individuals and firms are also held to high ethical standards.
Other financial professionals
Other financial professionals include registered representatives, real estate brokers, broker-dealers, life insurance agents and others.
You probably have noted that one of the recurring ideas in the definition of all the professionals mentioned is that they adhere to high ethical standards. Another way of looking at it is that financial and investment professionals are required to do what is right for the client rather than best for their own pocketbooks. When you see a certification behind an adviser's name, you can be confident that you are dealing with a competent, experienced and ethical individual. If nothing else, recent events have proven how critical ethics are in this field.
If you are ready to turn your attention to investing for your future, consider discussing your options with one or more financial professionals. Typically, you will wish to put together a team rather than rely on a single individual, and investigating the adviserÂs credentials is critical. Give us a call and let us help you develop your winning team.
Enjoy the cool October weather.