Q: Are investment advisers required to have credentials?

A: While some investment advisers and financial planners have credentials — such as CFP® certification or CFA (chartered financial analyst) — no state or federal law requires these credentials. Unlike federally registered advisers, many states do require their advisers and representatives to pass a proficiency exam or meet other requirements.

Investment advisers and financial planners may come from many different educational and professional backgrounds. Before you hire a financial professional, be sure to ask about their background. If they have a credential, ask them what it means and what they had to do to earn it. Also find out what organization issued the credential, and then contact the organization to verify whether the professional you’re considering did, in fact, earn the credential and whether the professional remains in good standing with the organization. For information on various financial professional credentials and the entities that issue them, please visit NASD’s website and read Understanding Financial Professional Designations.