Licensing for financial advisors

Licensing and credentials are really two separate considerations. Also, licensing in the annuity world is mandatory while credentials are not.

To begin with, advisors who work with annuities need to have a valid insurance license in their home state. The type of license is typically "life" or "life and health." In addition, advisors must have a non-resident insurance license in any states in which they might be operating that are outside of their home state. In other words, if you live in a different state than your advisor, your advisor must have a non-resident insurance license in your state.

Insurance licensing is mandatory and it is regulated at the state level by each state's department of insurance. You can check on an advisor's license status by going to your state's department of insurance website.

Annuity advisors who deal with variable annuities must have a securities license in addition to their insurance license. The license is typically a series 63. There is legislation pending that would require advisors to have securities licenses if they are selling equity indexed annuities.

Credentials are a whole other world. There are many of them and some carry more weight than others. The CFP (certified financial planner) designation is a solid credential that should be taken seriously. Good, however, to be very wary of some of the "senior specialist" credentials.

Credentials such as the CFP indicate commitment and that is a good thing. One of the best indicators, however, is simply experience. The amount of time that an advisor "been at it" is probably a great indication that the advisor is dedicated to the profession and has been able to stick around because she/he is doing a good job for other clients.