Question: CPA, CFP, CFA, JD, ChLU? Just what do all these designations mean? When do I need them, if at all?

First a quick course in acronyms:

  • CPA stands for Certified Public Accountant
  • CFP stands for Certified Financial Planner
  • CFA stands for Chartered Financial Analyst
  • JD designates an Attorney with a Juris Doctorate degree
  • ChLU stands for a Chartered Life Insurance Agent

But that's just what they stand for. Each of these professions requires experience and/or schooling in their respective areas and the passing of an examination in order to practice in their field. Each area has its own governing board that establishes a code of ethics that must be followed. In addition to all of this, each professional must complete between 20-80 hours of continuing education every two years to stay current in their field, if they expect to continue practicing.

Estate Planning (wills, trusts, etc.)        
Prepare Personal Income Taxes X      
Prepare Small Business Income Taxes X      
Investment Planning (this only includes your investable stock portfolio)   X X    
Comprehensive Financial Planning X   X    
Review Life Insurance Policies   X     X
Bookkeeping X      
Can I afford to buy that house X X      
Review Education Planning Alternatives X X      

¹ This is probably the only task that can only be done by one professional.

² This can also be prepared by an Enrolled Agent. An Enrolled Agent is registered with the IRS as a tax preparer and has undergone some training and examination to become an Enrolled Agent. The individuals preparing taxes at H & R Block, for example, are likely Enrolled Agents.

³ You don't need to hire a CPA for simple bookkeeping. If you have a small business, it will be cheaper for you to hire a bookkeeper.

As you can see from the table above, it is possible to use a CFP or a CPA for most of your financial needs. Both these professionals tend to have a broad knowledge of personal finances and can help you in a variety of areas. Either of them can help coordinate the various pieces of your financial puzzle, and you'll benefit from their ability to tie it all together for you.

On the other hand, you may feel that you don't want the same person to know everything about you and your family, and that you prefer to keep things segregated. It's up to you whether or not you want to deal with multiple people or have one person handle most of your planning needs.

For more detailed information about some of these professions and about how to find one who is best suited for handling your needs, visit: