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How a Securities License is Like a Driver’s Permit Thumbnail

How a Securities License is Like a Driver’s Permit


One of the most common questions we hear is “How are you different than some other financial advisors?” Many professionals can present themselves as financial advisors, including insurance agents, investment managers, even those with no qualifications or licenses. We believe financial professionals should pursue the highest level of financial education and industry insight to position as true experts. It’s also important for financial professionals to prove their expertise and experience.

What’s the Difference Between Licenses and Certifications?

A financial advisor is required to carry a certain set of licenses to provide professional advice on specific investment types. The Financial Industry Regulatory Authority (FINRA) oversees and maintains licensure to ensure compliance with FINRA and relevant industry rules and regulations.

Certifications are voluntary for financial advisors to acquire. So, what’s the difference between licenses and certifications for financial advisors? An analogy I like to use is to think about when you got your driver’s license. There was the written test and the actual driving test.

The written portion of a driver’s license exam demonstrates that the student “know the rules of the road.”  That they know the basic laws and regulations of operating a motor vehicle on the highway.  It doesn’t necessarily mean they actually know how to drive a car.  This written portion is similar to a securities license.  A securities licenses demonstrates that an advisor knows the basic laws and regulations of the securities markets.  The advisor knows ‘the rules of the road,’ as it were. You may not ask a teenager who has passed a written driver’s exam to chauffeur you around town unless they had demonstrated the ability to actually operate an automobile.

Gaining a certification is similar to passing the driving portion of the driver’s license test in that it demonstrates a minimum level of competency.  As you know, there is much more to driving a car than just the written test. Ask any teenager attempting to drive a manual transmission car for the first time. Similarly, we believe the best financial advisors not only “know the rules of the roads” by being licensed but also have demonstrated a minimum level of competency by attaining additional certifications.

Where does becoming a ‘Certified Financial Planner’ fit into certifications and licenses? A Certified Financial Planner (CFP) is one of the pre-eminent designations in the financial industry, which we will explore more in a future article. The important detail to remember is how much we value knowing what’s required for sound financial advice and that we can prove our expertise in helping serve you.

Our American Portfolios Denver team has the knowledge and the certified expertise to help you achieve your financial goals. Your first step is connecting with one of our team members to discuss your financial future. Start a conversation with our team today.