Get Shameless About Money

Replay: CPA? CFP? CPA? CF-What??

April 20, 2023 Brunch & Budget
Get Shameless About Money
Replay: CPA? CFP? CPA? CF-What??
Show Notes Transcript

There are literally hundreds of professional financial designations and sadly, most of them are not as legitimate as they sound – sometimes all you need is $50 and a 50 question test to be able to put some initials after your name. Find out which financial designations really matter and what the difference is between […]

Dyalekt:

Good afternoon and welcome to brunch and budget on bonfire radio with your host, Pamela capellan, a certified financial planner who wants to help take the bite out of your budget, brunch and budget.com. I'm your sound provider dialect. And here's your host, Pamela cappella.

Pamela Capalad, CFP, AFC:

Thank you dialect. And you always say at the beginning of the show that I'm a certified financial planner, or a CFP, professional as it's known in the biz. And today, I actually want to talk about what that actually means, and actually really wanted to talk about what CFP CPA CFA CRSA, CLT, CU, all of these initials mean, at the end of someone's name and what their credentials are. What is the difference? Which one actually matters? What, which ones are kind of scammy, which ones are actually a lot of work and mean that you actually know what you're talking about. And so, the show is a little bit of a selfish thing for me, because I always get the CPA CFP question. There's a lot of people who just come up and think that I am an accountant, or I can do their taxes. And I wish that I could, but I have a CPA myself. So I'm unfortunately not an accountant. I am a Certified Financial Planner, which I'll go into more details of what that is later. But basically, that means that I do comprehensive financial planning. So I do know about taxes. I do know about investments, I know about retirement planning, estate planning, legal stuff like wills, college planning, insurance, things like that. So there's a lot more covered. It's under the umbrella of financial planning, essentially.

Dyalekt:

So you do everything but Texas.

Unknown:

Yeah, I guess so. And I kind of know a little bit about taxes, too.

Dyalekt:

But you're not going to I can't do your taxes. That's the difference. You're not going to do a tax return.

Unknown:

Yeah. Yeah. I can't do a tax return. Also, if this is

Dyalekt:

helpful, I am an MC. But I am not a motorcycle club.

Pamela Capalad, CFP, AFC:

Thank you. Exactly. That's the distinction.

Dyalekt:

The same letters, you know, you always are completely different letters. There's just a C in the beginning of I know,

Pamela Capalad, CFP, AFC:

well, that's the thing. So in 2010, there was a Wall Street Journal article that I think is still relevant today. But it was written about the alphabet soup of financial designations, because what they found is that this is this is a really funny stat actually, in 2007, a study by FINRA as educational foundation, and FINRA is the independent securities regulator.

Dyalekt:

So not the bad guys from Final Fantasy seven,

Pamela Capalad, CFP, AFC:

are they because they're actually a really good thing in the real world?

Dyalekt:

Something like that. My my, my people who still own a PlayStation One, pop that John and

Pamela Capalad, CFP, AFC:

let me know, somebody Google that. But FINRA is FINRA stands for the Financial Industry Regulatory Authority, and they're an independent body who regulates people who basically invest your money. And so they actually did a study and determined that 46% of older investors were more likely to accept financial guidance from someone with a professional designation. And so basically, between 2005 and 2010, the number of financial designations that FINRA monitors went from 48 to 9595. Different financial designations. No wonder everyone's confused

Dyalekt:

more than doubled it that quickly. Yeah, yeah, well,

Pamela Capalad, CFP, AFC:

and here's the other crazy thing. 115 other designations exist that are not monitored by FINRA, last Wall Street Journal counted in 2010. And the funny part of the quote, The funny part of the stat is that 17% of investors will be more receptive to advice from a certified advisor for senior investing, even though there's no such credential. Oh, yeah. Yeah, that certified it. So they took a survey and they basically said, would you take advice from a Certified Financial certified advisor for senior investing over someone who didn't have that designation? And 70% of respondents said, Yes, we would. And that doesn't exist. Yeah.

Dyalekt:

That's like, the practical joke thing, right? Like yeah, was the Jimmy Kimmel he went to asking people at South by Southwest he was making up fake band names for fans are like

Unknown:

yeah, yeah, totally. It's like no,

Dyalekt:

which is like that's funny on a musician band thing, but it's really scary on an actual professional level. Ya

Pamela Capalad, CFP, AFC:

know, it's so crazy well, and here just here's an idea of what some of them are called. Now. There's accredited domestic partnership advisor accredited estate planner, associate an insurance services, asset protection planner, accredited retirement plan consultant. These all actually do exist. Imagine having to learn about imagine are having to sort yourself through this when you have no idea what the financial industry is like the three dimensional wealth practitioner that's actually designation. It's C three D WP, there's a three in the designation. It's real. You need to take seven online courses. And you have to take one 200 series elective or two 300 series electives annually for continuing education. I don't even know what that means. But yeah, you could be a three dimensional wealth practitioner.

Dyalekt:

What does that that's the craziest title I've heard I. That's pretty good, right? It's pretty superhero. We're almost thinking like Kobe, like some sort of exploding crazy. Look, 3d Well.

Pamela Capalad, CFP, AFC:

I know it's certified mortgage coach, chartered mutual fund counselor. These are just hilarious. Some of these and these all really exist. And some of them I read are regulated by FINRA, that three C three w one regulated by FINRA. Good. Yeah, yeah, it's a real thing.

Dyalekt:

These are legitimate industries with very exciting names well, and they all sound

Pamela Capalad, CFP, AFC:

so similar. So certified senior advisors, certified Senior Consultant, certified senior specialist, certified senior financial planner, chartered senior financial planner, and charter living advisor for senior and chartered advisor for senior living. Those are all different designations.

Dyalekt:

You may be answering this later, but I just wanted to know for myself is this in any way related to I remember, as I was growing up, more and more random business stick designation started happening, kind of for the purpose of appeasing employees that they didn't want to give a raise to. And then everybody became well just some of the words you were using sound became an associate something and there were all these not that important adjectives or formerly important adjectives slapped on,

Pamela Capalad, CFP, AFC:

like certified or chartered. This is what I'm this C section of the acronyms is huge.

Dyalekt:

Do we can we come to a stop and and have say again? C section

Unknown:

of the acronym? Oh, that can mean so many things.

Dyalekt:

Sorry, for all of you mothering the English language.

Pamela Capalad, CFP, AFC:

Yes, yes. But yeah, it's true. It's true. Those were it's just like, what is it putting all natural on something? Right, right, right, or premium or premium quality, all that stuff certified chartered. None of that really means anything anymore, is what's happening. I know. And it used to actually mean like, oh, you actually did a thing to get this thing. Like you got a certificate in something like, oh, wait, they're just handing them out. And the crazy part about a lot of these is that the requirements to pass them, some of them you just have to pay a fee, and then you get the designation. Oh, you're a professional in the field. pay this fee. And you can put these acronyms on the end of your thing.

Dyalekt:

Well, to be fair for 25 G's you can have your name on the Hollywood Walk of Fame.

Unknown:

Was that real? Really? Oh, that's a good tip. You

Dyalekt:

don't have to be anybody star you just

Pamela Capalad, CFP, AFC:

Oh, yeah, there's lots of spaces to y'all. Yeah. Wait, so did stars also have to pay $25,000? Yes,

Dyalekt:

the star has to pay the 25 Grand if they want the

Unknown:

house you don't even have to be probably inflation and all that. That's crazy. That's crazy. Starting

Dyalekt:

my Kickstarter tomorrow. Yeah, there you go. Bonfire radio can get 10 G's. Well, it knows my Walk of Fame star.

Pamela Capalad, CFP, AFC:

Right next to Michael Jackson is at a premium.

Dyalekt:

I feel like that one that real estate is taken. Yeah,

Pamela Capalad, CFP, AFC:

you're probably right. You're probably right. There's lots going on. Wow. That's crazy. Yeah, so just like that. Just like a walk of fame. You could be a a diversified advanced education. That's not even a person diversified. There's

Dyalekt:

another one. Oh, that's

Pamela Capalad, CFP, AFC:

a good one. But this is the name of the designation is diversified advanced edge. So one, what does that even mean? That's crazy. Diversified Advanced Education designation. Advanced Education and what

Dyalekt:

I would I would be very happy if you don't tell people what these mean. And the next show that we do you just quiz me and I'll and I'll guess and see what I can figure it out. Because I wouldn't know how to take

Pamela Capalad, CFP, AFC:

your amazing David Ramsey certified counselor, I could go on this list is long. It's long. There's like 100 of them maybe and this is just a sampling. So here's the thing. I'm gonna go over three of them. That really really means something in the financial industry, especially when it comes to taking care of your personal finances and your investments. One of them is the Chartered Financial Analyst, and CFA CFA not to be confused with the certified retirement financial advisor. See RFA. CRF. Tricky, tricky, tricky. They do this on purpose. So the Chartered Financial Analyst CFA requires about 900 hours of study Eat, and you have to pass three, six hours exams. For the CRF, a certified retirement financial advisor, you must pass 100 question exam and you need about 40 to 75 hours of preparation versus 900. Wow. Yes, yes. The other one that's important is the CPA certified public accountant. I feel like a lot of you are probably familiar with this one. You have to have a bachelor's degree with a concentration in accounting and pass a 14 hour exam. And then there is the certified Senior Advisor CSA or I guess, isn't that like some kind of like organic farm?

Dyalekt:

Yes, that also is a CSA certified. If you know the industry you're in, then I don't think there'll be too much confusion. Yeah,

Pamela Capalad, CFP, AFC:

except that it's Oh my God, so many C's and S's and A's. Students must pass a three hour 150 question exam to be able to put CSA next to their name. And then the Certified Financial Planner, which is what I am CFP, you have to take the equivalent of 15 credit hours of undergraduate courses culminating in 10 hours of exams over two days. So I had to take seven have to take six different courses and all the different areas of study and it actually took me two years to finish. The other the one that it sounds like si es FP students must take a chartered senior financial planner, which that's tricky. Actually. It's the lab F and the P stands for financial planner also. There's a lot of Yeah, that sounds like the same thing. Yeah. Chartered senior financial planner and certified financial planner. Ooh, okay. Kind of sounds

Dyalekt:

like maybe one is the you started out as a CFP, and then you become

Pamela Capalad, CFP, AFC:

a senior level. Right? Right. Right. Yeah. Yeah. No, but this is student throws me off though. Yeah, it does. Students must take a three a review course and pass an exam that you can finish in two hours. So a little different. It's a little different. Little less rigorous. Wow. Yeah. Three day review course. What does that even mean? Well, and the crazy thing about this, and the sad thing about this is they surveyed older clients specifically because a lot of older clients, you know, I mentioned all of those names. I had senior in them, they're referring to senior citizens, okay. They're not referring to like senior level, they're referring to the elderly, you know, people who have money in their last days, they saved up all their money for retirement, and they have all this money to manage baby boomers, you know, people like that,

Dyalekt:

it seems odd that specifically for working for seniors, that it would be way less work and live way less difficult for you to get the to get the

Unknown:

initials does doesn't it's too bad. That's not how the industry works. I was

Dyalekt:

gonna say the certificate, but it's not a certificate, it's a charter,

Unknown:

or just like, like some initials. It's like a journey.

Dyalekt:

You know? Yeah, I don't know. I don't know.

Pamela Capalad, CFP, AFC:

I don't know why there, but it's to take advantage of the elderly. Wow, yeah, that's basically what it is. That's what a lot of them are, is you put the word senior in, and they think you're an expert in retirement planning and senior living. And, you know, a lot of a lot of elderly end up getting fleeced because of this kind of stuff, and people are taking advantage of it. So those, those are things to watch out for, in general, tell your parents about it, if they're at that age, things like that. Because there's a lot of financial advisors who all they see as dollar signs when they see older people, because they know they have a nest egg for the most part.

Dyalekt:

It sounds like you as a CFP could do what a C RFP does, because you do Oh, yeah. I mean, in general. Yeah, exactly. Just have to seek out the senior citizen.

Pamela Capalad, CFP, AFC:

I could just choose my client base as senior citizens if I wanted.

Dyalekt:

Okay, so that's intentional confusion. Yeah, they're using a name that's similar to the legitimate job to do a bit of a con job. Yeah. Okay. Cool, because I know because some of the things we're talking about is how you know people confuse you with a CPA, right? CPAs aren't jerky or Connie are versions of you. They do a whole different thing. Yeah. I just wanted to make that distinction. Yes,

Pamela Capalad, CFP, AFC:

very true. Again, the important ones are CFA, CPA, and CFP and I'll say that three times fast. And then the initials three initials CFA, CPA, and CFP, those are probably some of the most rigorous and most recognized designations in the industry, the ones that pretty much matter, I'd say. And then we're gonna go over another one called an enrolled agent, which is similar to a CPA, which we'll go over right after the song, but I'm going to go into the difference between these three, and what kind of study they have to do and when you should seek each of them out.

Dyalekt:

In the interest of keeping it alphabetical, we're going to go into mob was Blackalicious from out on the west coast with their song, Alphabet aerobics and then we'll be back to do a little bit more brunch and budgeting on bonfire Radio. And

Unknown:

now it's time for our wrap up let's give it everything we've got. Ready? Begin artificial amature is haunted all amazing analytically I assault animate things broken barriers bounded by the bomb the buildings are broken basically young bombarding hazard will lead create catastrophes casualties cancelling camps got the canopies collapsing that need a diamond tank daily doing no demonstrations Don data on the down low, and other editors with each and every energetic epileptic episode elevated advocate your rheostat fabulous fantastic memories of beating the fanatics you've got great global groups going for Yes. In this game with the glorious ism hi hello. Hi historical Hey Holocaust and Hyrum Hana Reggia homeboy imitators out alive i intimidate in an instant our rise in irate stay tuned stoma Dan's like Jheri curls talking to us justly it's just me right in my journals kindly I'm handling all kinds of kangkong karate kick type roots in My Kingdom let me live along like lyrically lessons is more lame when I was just losing my leverage my mind makes marvelous moves massive marbling movement in my foot up after make his nap no one I'm like that's a relief that never lacked make noise national elite and operation opposition are not optional out of sight out of mind whitening opticals protective home powerful punch lines crumbling Teddy powderpuff semuc Rob White Queen kowski cry this morning where we're losing out a quarter we got a really well wrapped rosin up rapidly writing the Western radio activities scientifically sound search on silencing simplifies apps that are 10 times talented too tough take that challenge let's get in tune up universal unique untouched unadulterated the raw uncut for Buy Smart Victoria salad violate that event take advantage while I'm on well when it was worshipped as we went up work we did up on the worship rock my X ray gays and roses from our index height letters and phone calls and yellow back neck mouth young ones your yesterday's one yourself are you on the exact copy zoom into the scene as zero winds and thoughts overtones brown see lights? Good. Can you say it fast?

Dyalekt:

And we are Beth on bonfire videos brunch and budget that was Blackalicious with alphabet aerobics and yes, it's pronounced zealot, not Z lot. But you know, they say stuff differently in California.

Unknown:

Tomato tomahto

Dyalekt:

Yeah, I don't know what you're talking about. But let's get back to speaking in our native tongue in English is Pamela Caballo.

Pamela Capalad, CFP, AFC:

Yes, thank you. I feel like I should read all of these credentials really fast to like what? Accredited advisors urine sodium Academy levator accredited, as I mentioned, that's kind of what the song sounded like,

Dyalekt:

we were gonna get the beat and you can just do your version. I want to hear that live and live. Next

Pamela Capalad, CFP, AFC:

week, the most boring version of the Blackalicious song

Dyalekt:

ever, which we're talking about. It's gonna be

Pamela Capalad, CFP, AFC:

all the designations, all the designations credential you can get as a financial advisor in two minutes or less.

Dyalekt:

What's funny is, since it's a bunch of initials, I bet it would be really easy to make that right.

Pamela Capalad, CFP, AFC:

That's true, AIA l You okay, I'm not going to do it. It's tempting, though. So right before this, we went over how many sort of not as rigorous let's put it not as rigorous credentials you can get and you can put after your name as a financial services professional. But the ones that we are going to spend time on today are three that really should matter to you. They are the CPA Certified Public Accountant, CPA, they are the CFP certified. Yes. Oh yes, Certified Financial Planner CFP, and the CFA, the Chartered Financial Analyst, C F A

Dyalekt:

man, how come there's only like five letters in between those three designations or three letters each, it's already so

Pamela Capalad, CFP, AFC:

it's already so confusing. And I totally I think I didn't know what a CFP was until I started being in the industry, in the industry. Everybody knows what a CFP means and how much work it takes and all of that, but I feel like that, unless you're watching those crazy commercial that they started running on from the CFP Board that it's really, really hard to tell what we actually do and it's hard to really tell what CPAs do and what CFA is, do you know, it's not something that it all sounds like financial stuff, period? Right, you know, and the nuances of it just like you know, they may not even matter as much but when you're talking about your personal finances, it is a big deal. Now, first, we're gonna talk about si P A, and here's the crazy part first. So, for the record, anyone can help you prepare a tax return as long as they register with the IRS and get a preparer tax ID number or a p 10. They IRS has been talking about adding a basic competency test but they don't have one yet. So basically, anyone can call themselves Yeah, yeah, right. Anyone can call themselves a tax preparer, just by getting a p 10. And paying the $64 fee. So watch out for that. That is a big thing. A tax preparer and a CPA are not the same thing.

Dyalekt:

It's funny because we were talking about this last week with the MOOCs, talking about how barriers are being broken down in terms of who's an expert who gets to know this, who has this sort of job title. And while it's a good thing, that some of these barriers are being broken down in people for their own sake, as we talked about, it was mostly an autonomy thing for their own sake, they can gain knowledge. Yeah, from solid, respectable, accredited places. But on the other side of it, there are also people, because you were saying about, you know, the ability to cheat, and that's a thing. Yeah. cerned about, and it's not even just cheating in the subject. There are people who put together systems and organizations that are set up to prey on you. Yeah. No, it's true, based on our old school mentality of

Pamela Capalad, CFP, AFC:

thinking that credits and certifications mean, some but yeah, just

Dyalekt:

being an expert. Yeah. All these words that you say, you know, don't mean anything anymore. They still do have a, at least a definition.

Pamela Capalad, CFP, AFC:

No, it's true. And the thing is, until you hear them all together, they sound official, they sound professional, you know, and that's the game. And so that's, that's what's scary about this. And that's why you need to do your due diligence, you need to do your research, you need to really look into the person who's doing this. And you do need to pay attention to the designations that they have the extra ones that they may have added on for fun, and make sure that their designations are actually credible, you know, ask what the designations are, and then Google them. Look them up, see what the actual coursework is required behind them when you're talking to a financial professional, because it's your money, you know, and money is your livelihood. So it's not just, you know, a number on a page to a tax preparer. It's you and your life. And so you need to take responsibility for that. I think a couple shows ago, we had Joanie Williams on and one of the things that she said that we tweeted hard was, it may not always be your fault, but it is always your responsibility. Yep, yep. Yep. And that's something that you have to keep in mind when you are giving people the ability to deal with your money. So again, anyone can be a tax preparer. CPAs.

Dyalekt:

And for your own, you know, taxes. And you want to be a tax preparer, so feel empowered to do your own taxes.

Pamela Capalad, CFP, AFC:

Yes. If you're a W two employee, and your tax situation, isn't that complicated? Otherwise, you know, you should probably see someone to pay your taxes. But yeah, TurboTax has made it really easy for you, if you get a W two to just do them yourself.

Dyalekt:

I'm just saying, you know, it's solid for these things, you know, you go and you take these things, and you get these certificates in the ESA Yeah, or whatever we're calling these degrees. It's just fine. If it's for you, yes, you just needed to take a little bit or to feel competent, or whatever it's going to do for you. But you know, there's a there's a difference between that and calling yourself an expert for the purpose of guiding others Yes.

Pamela Capalad, CFP, AFC:

And taking money from them. That's the big thing. So a CPA Certified Public Accountant, they are licensed by state, all states require a 14 hour test. So it's like a uniform CPHS. And then most states are also required 30 hours of college level accounting and 24 hours of college level business classes. The CPA actually covers more than just taxes. Taxes are only covered in 1/4 of the actual test. Oh, yeah. So CPAs are also tested on financial reporting, business law, federal tax regulation, business concepts, and not all CPAs actually can even prepare taxes like they can technically, but they may not have even kept up with the tax code enough to be able to pay your taxes. They go in and they do corporate taxes, or they do financial reporting for big corporations, or they do forecasting or they work at hedge funds and things like that. So CPA is very, very comprehensive. And doing your income taxes is something that some CPAs decide to do. And a lot of CPAs don't. There's actually about 650,000 CPAs. In the US. Yeah, that's a lot and the majority of them aren't tax repairs.

Dyalekt:

That's really interesting. Yeah, I don't ever think that I think of if somebody is a CPA that they're down to do my taxes. Yeah,

Pamela Capalad, CFP, AFC:

yeah, definitely. Now there is another designation that is just as credible, and they actually focus on taxes. It's called an enrolled agent or an EA. It's, you take a test as admitted served by the IRS. It covers exclusively all tax laws. So the focus for an enrolled agent is to know the tax code back and forth. Now you become an EA. If you are going to be preparing taxes, period, you can just like a CPA, you can actually CPAs and EAS Enrolled Agents can actually represent you in an audit, which a tax preparer who just has a p 10. Can't. Okay. Yeah. Or yeah, an attorney can also represent you. But that's yeah. So an enrolled agent is someone also it's, it's a, it's a good designation to have, because, you know, they took a test to learn the tax code. And they also have to have, they also have to take continuing education every couple of years to keep up with it. Right. Yeah, definitely. CPAs as well, the most the designations that are actually kind of meaty, and have some meat behind them require continuing education, because the financial industry changes every couple of years. You have to keep up like the estate tax laws changed in 2010 2011 2012 and 2013. Yeah,

Dyalekt:

I feel like I have noticed when I have worked with finance, folks, I mean, I feel like I've noticed in other industries too, but when I've worked with finance people who weren't up to date with stuff, and it has done me all kinds of dirty Yeah, again, talk about your your total taxes. For those of y'all who go to your h&r blocks and stuff like that. Make sure that cat that you're speaking to is up to date on their thing. Yeah. Because lots of times if they're not, but they have they're in some sort of place, or like you said they've got some initials that make you think they do,

Pamela Capalad, CFP, AFC:

right, or they used to have initials that they didn't keep up with.

Dyalekt:

Yes. Which is difficult for, for perspective.

Pamela Capalad, CFP, AFC:

Yeah. Yep. Yep. This is what you got to do. At the end of the show, I'm actually going to share websites with you guys where you can look up whether these licenses are still active or not.

Dyalekt:

That was what I was just about to ask. Because I was like, I don't know how you figure that out. You go up there and you're like, Yo, I'm a CPA. Okay.

Pamela Capalad, CFP, AFC:

Show me. Can I see? Oh, it's a CPA on it. Okay. You made the card. Okay. That's usually the train of thought. Right. Yeah. So that's, that's the other thing that they can get you on. bookkeepers are, they can be CPAs or EAS, but they're not necess. They don't have to be, you know, bookkeeper, just needs to learn how to keep the books. So they often perform the same job functions, they you know, they can get a P 10. And also prepare taxes for you, especially if they know what's coming in what's going out and reconciling your statements and things like that. They cannot represent you in an audit. So just keep that in mind. If you're hiring a bookkeeper, make sure that they are at least Enrolled Agent, if they are preparing your taxes. And if you're, if you're hiring a CPA, make sure that they actually prepare taxes on a regular basis. Because if you just see that designation, and actually it's not their forte, and they do taxes on the side, you know, to make some extra money, but really they do like, you know, corporate financial reporting, right, right. That has nothing to do with being able to pay your taxes.

Dyalekt:

Now does a bookkeeper is can a bookkeeper also call themselves an accountant? Yes, I've heard those two used interchange interchangeably.

Pamela Capalad, CFP, AFC:

I mean, you can kind of call yourself whatever you want. Because accountant is not a designation. It's a job title. Okay. Yeah, that makes sense. Yeah. So really, that's why it's important to look for the CPA designation or the EA designation, the Enrolled Agent designation. So bookkeepers are technically accounting for your money going in and money out. So okay, but

Dyalekt:

the accountant is not the same official designation, that CPA exam agent is exactly. You see, that's funny, because it counts. It feels like a specific designation rather than a job just like lawyer, right is a specific designation and not just a job. Yeah, yeah, definitely. In terms of our colloquial understanding, yeah,

Pamela Capalad, CFP, AFC:

no, you're right. And I think that that's why it's important to understand that the designations do matter, because, you know, bookkeeper can call themselves an accountant or bookkeeper and say that they do all of that stuff, and people will believe it. Sadly, sadly, so the there's actually only just under 50,000 enrolled agents out there, which is interesting, because I feel like the the testing is less rigorous. And especially if you are someone who's going into payroll taxes, I would recommend going with an enrolled agent or CPA, because you don't if you get audited, you don't want to have to find a CPA or an EA to represent you in an audit. You want to be able to go back to the person who actually did your taxes to help you with the audit. I mean, that makes a lot of sense. Yeah. So I would pay attention to those two designations when you're looking for someone to prepare your taxes at a bare minimum, bare minimum because there was also a lot of bad accountants out there, unfortunately, a lot of accountants who you know, love tricking people, because they assume that you don't know what's going on in your tax return. Which, I guess could be a fair assumption.

Dyalekt:

No, no, I hear ya know, that sounds really scary, though. There's a lot of accountants out there who love tricking people. I've heard

Pamela Capalad, CFP, AFC:

some pretty crazy horror stories about people who've committed fraud, who scammed the books and put it in their pockets.

Dyalekt:

Yeah, I'm not gonna lie. I've heard again, anecdotally. Yeah, a lot of that type of thing. But you said, actually, a really huge problem.

Pamela Capalad, CFP, AFC:

I've worked in accounting, I work in an accounting firm now. And we've seen We've seen tax returns where people get tax credits for stuff that they never did. We've seen people, we've seen accountants who have taken other people's CPA license numbers and put them on the tax return instead of their own.

Dyalekt:

Yeah, that's, that's really grimy.

Pamela Capalad, CFP, AFC:

Yeah. So that they don't get on the hook in case something else happens. We've seen accountants who even though they prepare the tax return, wrote self prepared on it. That's one thing to watch out for, too. If you have somebody else, prepare your tax return. You have them put their name on it. Don't let them write self prepared,

Dyalekt:

they're liable. If they put self prepared, then yes, you owe them.

Pamela Capalad, CFP, AFC:

It's just you and they're like, why did you take this credit that you obviously didn't need. So that's that's some stuff to watch out for. For sure. The difference between a CPA and an enrolled agent for income tax purposes is not that big of a deal. If you just need your tax return preparer that's totally fine. And either one will be capable. Remember, as long as CPAs regularly prepare tax returns on the more like accounting and financial planning side, if you need that service, then if you need help with business structure and business entities and keeping your records and keeping your books, you might want to go with a CPA firm, or a firm that works with the firm that has CPAs more than an enrolled agent, because most of the time they are they prepare taxes, and they help you with your estimated taxes and things like that. So it really depends on what your needs are. But at the very least make sure that they are one or the other before you before you have someone touch your money. And before you give somebody your money. Oh, another thing to watch out for that I think I mentioned on the tax special is to make sure that they don't take a percentage of your refund as a fee. I just want to mention that again. Because it's really important. Make sure that they do not take a percentage of your refund, because that is a conflict of interest, make sure it is a flat fee, and you get an invoice for it. So yay, CPAs and EAS, they're definitely awesome. And now I'm going to talk about the CFP designation, it's the one that I have certified financial planner, the amount of coursework that goes into it. Now they actually require seven courses of study in general planning, retirement investments, taxes, insurance, estate planning ethics. And then there's they have a capstone course where you actually have to practically apply all of the knowledge that you've learned. Ethics, ethics, oh, ethics is actually all the way throughout. I mean, I feel like it's, as we just went over the financial industry may not be completely ethical. We actually have a code of ethics that we are required to adhere to.

Dyalekt:

Yeah, yeah. This is what I wanted to know. Oh, yeah. What's, what's up with that?

Pamela Capalad, CFP, AFC:

Yes. Good question. Thank you. I feel like that, in general, I think ethics seems a little ambiguous, because it's like, well, just don't trick people or do shitty things to them. Right. But the other part to do? Yeah, now it's not. Now the other aspects of ethics is that you have to go by a code. One of the one of the big ones is that you have a fiduciary standard to the client. And what that means is, you have to do what's in the client's best interest,

Dyalekt:

period. Okay, like, like a Hippocratic Oath type of thing. Yeah, that's

Pamela Capalad, CFP, AFC:

a good way of putting it. So you have to be all of your decisions have to be in the client's best interest, not just like, oh, this is a good decision for the client. But there's a better one over here, but I like this other one, because it helps me out. You have the fiduciary requirement to be completely unbiased and only operate for what's best for the client.

Dyalekt:

That sounds awesome but impossible to regulate.

Pamela Capalad, CFP, AFC:

Well, the thing is that with, with these three big designations, consumers can complain and file reports and if they feel like that, a CFP or a CPA or CFA acted outside of their best interests, they can actually file a complaint and take it to court and go to trial and they'll investigate and do hearings and things like that. So there's recourse. So You know this, this is a big deal. Good to get this as well. Yeah. And the other thing is confidentiality. So I'm required to not share client information with other clients with other people. Everything that you tell me is under confidentiality, completely 100%. Or I can get my license revoked. Yeah. So that's another big one. Another big one. So actually, what was interesting is the test, about 35 to 40% of it is now on ethics. Wow, yeah. Understanding the code, understanding what the nuances are ethics in the process. So being really diligent about fact finding with your client and making sure you get all of the information before you give them recommendations, things like that are really, really important for, for the test and for being a Certified Financial Planner, you know,

Dyalekt:

wow, that sounds really, yeah, that's, that's really well thought out. And it makes it I was just saying the doctor and lawyer thing, it makes it seem important on that kind of level.

Pamela Capalad, CFP, AFC:

Yeah, I mean, it's people's money, right? people's livelihood. So it should be at that level. And that's why I think the CFP designation is super important when you are actually talking to a financial advisor and having them look at all aspects of your life, whether you end up working with me or another financial professional, having the CFP designation holds them to a higher standard than other investment professionals, they're required to be under these ethic. Well, I have to take every two years, I have to do 30 hours of continuing education and 11 of those hours have to be on ethics. That's how important it is to the CFP Board itself, make sure that you're making sure that you're taking care of stuff properly, you know. So the other thing is, I took a 10 hour test 10 hours over two days, the CFP Board just reduced it to six hours starting in November, but the test is still going to be just as hard. It's a 60% pass rate for the test. And you also have to have three years of relevant work experience, you can't just take the CFP test and call yourself a CFP, you actually have to fill out a form that tells your work history and gives the name of your supervisor so they can call them and make sure that you actually had that work experience that was relevant. There's about 61,000 advisors who have their CFPs because it is a really hard test to earn as well. It's a really, really hard designation to earn. So for the CFA, the last one chartered financial analyst, in terms of personal finance, you will probably encounter this one, much less because a lot of CFAES our traders are investment analysts, their portfolio managers, they manage big institutional clients, things like that. The CFA is probably it's another really, really rigorous course. And it focuses specifically on investments. So accounting economics, they also have ethics, finance, mathematics, only 42% of candidates pass all three exams, they have three different exams, that can take several years, you need four years of work experience 900 hours of study, I mean, just all of these designations, and all of these designations also require a college degree, actually,

Dyalekt:

so no MOOCs or you know,

Pamela Capalad, CFP, AFC:

MOOCs for you. I mean, that might change later on. But as of now, you need to have at least a bachelor's degree for all of these designations. And just just across the board, like look at how much study you need to have, and how much work experience you need to have just to be able to call yourselves one of these things.

Dyalekt:

Yeah, I appreciate the need for work experience.

Pamela Capalad, CFP, AFC:

Yeah, that's huge. And then with CPAs, you need to have taken it in college. Like you need to have focused on it. So I think that that is something

Dyalekt:

so it's not just a college requirement. It's a college requirement. That's specific.

Pamela Capalad, CFP, AFC:

Yeah. Yeah. You need to have majored in like business finance, accounting, something

Dyalekt:

liberal arts degree and getting your

Pamela Capalad, CFP, AFC:

GED, you gotta go back to school. And it depends on the state for CPAs. But most states require that kind of rigorous knowledge,

Dyalekt:

although not to diss the MOOCs that we were just big enough, hopefully, as these things get more grounded. Yes, find ways where if you went to school for something that didn't have that kind of focus, and you don't want to go and get a whole nother four year degree, there's possibly a way to move your way on in your way

Pamela Capalad, CFP, AFC:

on it. Yes, I'm sure there are. I'm sure there are a couple shorter, shorter timeframes, you could get a CPA and but for the most part, all of his required work experience, the tests are all really rigorous. That's a big aspect of this is I for my CFP test I took an additional five day review course on top of just on my own for my own sake, on top of all of the courses of study that I went through. So, just to make sure that I was prepared for this test that is really, really hard, probably the hardest test I've ever taken in my life, and CFAES, three tests three levels, there's about 120,000 CFAES. And before the CFA designation existed, institutions used to send people to get their MBA. And what they found was, this is the comparison between an MBA and a CFA, an MBA master's in business administration. A program an MBA program is a mile wide and a foot deep, while a CFA Program is a foot wide and a mile deep. So while you are not learning a wide breadth of things, for a CFA, you are learning everything there is possible to know about the thing that you're learning about. So this is why your hedge fund managers and traders and investment analysts and portfolio managers, the people who are managing your money on a high level, mutual fund managers, things like that, most likely can't do that job unless they have a CFA. So this has really, also, in a way regulated the industry and made sure that people who went through a lot of schooling and a lot of hours of study are managing your money on a high level. So yay, CFAES are great, too. And that trade is hard from what I've heard, and it's all specific focus. Yeah, definitely. And in reading about all of these, if you yourself end up wanting to go into it, I read a couple articles about all of them, and they all have had literal warnings at the top of the article. Unless you really want to do this, it's not going to be worth it to start, you know, you are getting into something that is really hard and will take a lot of time. All of the articles had that sentiment at the top.

Dyalekt:

So it's like Judaism I don't know if you really want to get into this is a big commitment.

Pamela Capalad, CFP, AFC:

And they keep saying that the whole time until you finally then then and then you're Jewish. I mean, it seems

Dyalekt:

like you're the next episode of brunch. Your budget will be Pamela Capella explaining to you how you convert to Judaism to be a very short episode.

Pamela Capalad, CFP, AFC:

I guess I don't really know the process as well as the other Yeah, that one you're not the first No, not not yet. No, I don't know. So CPA Certified Public Accountant, ie a Enrolled Agent. Those are for taxes, CFP, Certified Financial Planner, those are for comprehensive personal financial planning. And then CFA charter financial analyst is for investment advisory and portfolio management. Those are the three. And I don't want to say this across the board, but I kind of want to say it across the board. Those are the three that really really matter when you're trying to figure out who you want to advise you.

Dyalekt:

When you're trying to figure out who you want to advise you we're not trying to guess the other job.

Pamela Capalad, CFP, AFC:

Yeah, well and also on a personal investment advisor level a CFA is not really necessary. If you if as long as you are registered, and you're licensed the investment advisors Registered and Licensed a CFA is for people who are doing really, really intense and specific stuff. So someone is just investing your money and managing it. You don't need a CFA for that. You just need to make sure that they are FINRA registered, which I will go into right after this song.

Dyalekt:

All right, I was thinking of going into a song where we would have OSI and OGC and Mo P and all the other initials, but turns out alright, NWA and all the industry groups, but it turns out all the groups whose names start with initials are amazingly violent. You know, yeah, yeah. So I guess because they chose it. We can ask them taking initials because we ain't got time to take names. Oh, I guess that's what it is. So instead, we're gonna go a little more sillier with the Bucha Nickens and their joint lash move because we ain't got nothing to prove with brunch and budget on bonfire.

Unknown:

basketball basketball used to tease me because my hair was cheesy. But now I'm living well like to eat because I'm rockin beats beats woman to win because I'm poor and witches have to duck now we can be like swim we have to score let me give me a little perspective to my brother live across the street Dr. Ashley monster measurements fashion in a fashion which is why I'm now 1000 At the season what my style call me. I'm making some bucks again fully prepared to table empty sleeping and listen when I talk as I stood in the group to the Mr. Wu no need to be with fu national arriba they're cheap. Merci beaucoup Sianna is about to wreck shop with the doodle chat system they chose to take a look at this over the last month who said that but just for the big for my lashes for the thickness of about gets the witness actually hung up on the eyebrow the senator from Alabama going back to Apple jumbo when they come out on the head Mr. Chief was gonna say get a genetic you said I get my accent your mouth gets close to talking women MCs has made their reason on step two on the last tip so oh chicken while we're on this specific topic when I kicked him Chitty Chitty Bang remember the two of you Nashville you I ain't got nothing once again with the ill of the MCS brand this style is so so five black skills I just stay true to my roots in 20 years of age but yet I still see not it was so cold my senior year but I chose to pursue in a field computer and with some height beats and refusing to get on the board lay down a track and do 10 laps that's depend Pastor Pat and I'll kick it off just come aside to Jim and witness who was busted and it won't be Tony Designo Dan as small as I am I still get that chance to do a free salad step but yet I still slip not trying to say that no one can do with me not only is it delicious all right it's my delivery name will represent you know has this hash replace my name is Malik and I'm unique in other words nothing commercial about this this mainly hardcore that he got what you want do you want more? Because I got moister national shaman aka the Vaseline of Chesapeake don't feel more threatened by say everybody the refugee politics back in the room there's no way you can handle this shit so fly that you could call this scandalous because I'm Manna Fest in words in a friendship at least in unison sound that I'm teaching I am not seeing not not submit a Roswitha to the beginning that the Chinese seller says the script was the rule and it's to his cowboy in the East releasing a new check the lyrical angle single the alarm the girls cooties I was saying no aspiration date so you know this even the weekly check so I don't have to write the check for what the company Michelle Obama So they're gonna stop his trip to give me the mistake. Not Aleksandr considered to be cray cray. But like the gray state, the moose and the ankles I will bring up the MO Loomis on the snick ticket to try and get a token all women like shopping

Dyalekt:

Welcome back to brunch and budget on bond buy radio with your sound divided dialect and your host Pamela Capella, we were just listening to lash move on the food snicks feature and by did all of A Tribe Called Quest. And now we're about to finish telling you about all of our initial designation.

Pamela Capalad, CFP, AFC:

Yes, thank you. Thank you. Reservations. Oh, that was a crazy song, by the way. Um, so I was I had just mentioned FINRA. And I

Dyalekt:

wanted to tell you, I wouldn't look that up during the break. Was it the bad guys from Final Fantasy seven? It was a corporation called Shinra.

Unknown:

Oh, confused with FINRA. I mean, I wouldn't be surprised

Dyalekt:

if somebody was lying. And I also looked up a little bit about the fraud and with the tax fraud and we found out that last year $3.6 billion was gotten in tax fraud refund money for from the IRS. But that's only for people who were when they were identity. Oh yeah, identity only an identity. Yeah, yeah. Yeah, that's a huge point 6 billion alone with identity theft fraud.

Pamela Capalad, CFP, AFC:

Yeah, that's probably a problem. Definitely. Definitely. Oh, yeah. Be careful about that to hide your social security numbers. guys take care of them. So FINRA, the Financial Industry Regulatory Authority in the tenant securities regulator. All investment brokers have to register with FINRA once your securities license securities license means that you are allowed to trade securities on behalf of your client. You're allowed to buy mutual funds for them, advise them on their asset allocation, things like that. And you are registered by FINRA. And as a consumer, you can file complaints on FINRA and ends up on their, basically their permanent record on FINRA. It never goes away.

Dyalekt:

Like two weeks in a row, we got school stuff. Remember? permanent record?

Pamela Capalad, CFP, AFC:

Yeah. So I just for instance, you can go to broker check.finra.com.finra.org. Broker checked out finra.org. And I just looked up the investment advisor that we had on our show recently. Sure. Net M. Henry. She's totally in there. She's registered. She's real. actually registered as an investment advisor on FINRA, I looked her up. I have her CRD number right here. I don't even know what that stands for. He would have that wouldn't mean let's ignore that. No, no more designation. No CRD number, it looks like it's just the license number that you have through FINRA. And she's had 10 years in the securities industry. It tells you everything about this advisor, it tells you any disclosure events that they've had, which means anytime someone's complained about them, or anytime they've gone to trial for something that they've done. It tells you their employment history. It tells you so you can see if they're lying on their LinkedIn word. Yeah, they list everything because they tell you where you had to register with FINRA.

Dyalekt:

Just so you know, I'm lying on my LinkedIn. Super, super old. I'm lying by just I just wanted to admit that out there. Thank you. Oh, this all this stuff about accreditation. legit or not legit? I've been I've been feeling nervous. Oh,

Pamela Capalad, CFP, AFC:

okay. Luckily, you're not on FINRA. They also tell you what states they're registered in. So you have to be registered in a specific state to be able to trade for clients on that state. So sure, net is registered in California, Florida, New Jersey, New York and North Carolina. They tell you which exams they've passed, and how many regulatory organizations they belong to.

Dyalekt:

Wow, this is pretty transparent. It's comprehensive. Yeah, FINRA

Pamela Capalad, CFP, AFC:

is great, independent regulatory body. It's amazing. So definitely when you start to work with an investment advisor broker check.finra.com their ass straight up.

Dyalekt:

I don't know how to do that broker check that as I

Pamela Capalad, CFP, AFC:

just yeah, you know it? Well, because they're the ones who are really managing your money and lose it in Ghana in the stock market.

Dyalekt:

I'm Alicia pallet says the hardest financial phrases since Wu Tang finance.

Pamela Capalad, CFP, AFC:

Look it up. If you don't know it, I'm the CPAs you can check by going to CPA verified.org. As I mentioned before, there are people who actually will steal other accountants license numbers and use them as their own. So when you are when someone claims their CPA, go on this site, it'll tell you if their license is active. It won't tell you as much information as FINRA but it'll basically tell you their license is active. For CFPs. It's actually it's a long, long, long web site. So I'm just going to tell you to Google CFP, verify, yeah, just Google CFP, verify and you will be able to look me up for instance, I am the only Capella that is a CFP. So if you encounter another Capella and they say their CFP, it's a lie. It's just me. But you can look them up, make sure that their CFP is active. Because another thing is that there are a lot of people will pass the test and not have actually earned the designation because you need three years work experience. So if someone starts using those initials without having the work experience behind them, then they're not registered with the CFP Board, even though they pass the test. So that's something that you need to report as well. Find that skill set.

Dyalekt:

It's not about the test.

Pamela Capalad, CFP, AFC:

It's it's about the experience. It's about all of it. It's about the skill, the experience, all of it. CFAES another long one, so I will just Google CFA verify, as well. If you if you need to check if they're a CFA, but really for investment advisors, the important one is to look on FINRA, f i n r a.org. And there's a broker check search right there. Make sure that they don't have any disputes or disclosure events or anything like that. That's really important. If an advisor does ask them about it and see how they react. Because sometimes there are situations where clients just complain to complain, and that's fine. And sometimes there's situations where the broker is shady and just didn't mention it to you, or they've had a history of, you know, fraud or complaints from clients, you know, and that's something that you really want to check when Someone is handling your money as well. So yeah, I think that is all the time we have and all of the initials that I have left at this point. So if you have any questions, Pam at brunch and budget.com on CPA CSPs and CFAES and hopefully I have clarified some of the designations for you and also you ignore all the other ones

Dyalekt:

and on that tip to close ourselves out with the transparency and the the people who are preying on you and the people who should be telling you stuff and all that. I want to go a little bit old school to the Fujis with their first record Blunted on Reality that y'all didn't hear you only heard the score you know, I'm just kidding. You probably heard it too. But here's what really makes me Miss Miss Lauryn Hill with one of her first solo tracks some seek stardom and then forget Harlem you remember Harlem anyway? This is brunch and budget on bonfire radios See y'all next week

Unknown:

in the church my conscience hurts flesh like me she's paralyzed from the thighs and the man who pulled the trigger did anybody lose his left chest Jimmy to call the shots he plays the bass guitar like they've been played the hot he's not his name was quick because whenever he speaks he's got the wisdom of King Solomon backs in his eyes from those sleeps sometimes you don't have the fame in Madison Square Garden so some six startup but they forget hollow but to get most of all the kingdom of God has told me someone could do quite a kitchen on a mountain and got written by a cocoa butter or which check the lyrics no time to contradict your family opposite you and my mother told me wondering if something will take your head robots and teachers distract me because I do when my coach should be tonight your Mom I can't neglect my passion rocket Scotland because my two levels resemble jet and I descended from the wicked people claim I will be wet back to Mormons more of those evil things what have you made me comprehend my back was to make me see what's wrong with me that went into your vicinity you see my God he never asked me to go and see what's wrong with me Give me your insecurity give me in my ability somebody that they won't you let me be your half the last you watch them backwards tell the truth and allow this keep their pockets full of songs rather than just keep their pockets full for the songs. I knew because the master told me from a baby to a woman from a woman to a bank. Like for some short faculty comes for clubs where the money is no longer there we go there we go. There we go. I got my networks you get your halls we never open doors that we neglect and don't protect the ones people never really seem to care and then they cry out my people why aren't we treated equal as we flee weekly our own community is we leave our family in poverty as a family please recover. Now if you want to win family keep their pockets for you. People keep their pockets what our souls wanted