A professional designation demonstrates your competence and expertise in your field. But, with so many designations to choose from in the financial services industry, it can be hard to pick the one best suited to your practice and your career.
Here’s a guide to some of the most commonly accepted financial advisory designations to help you decide which best suit you.
> Financial planning designations
Certified financial planner (CFP)
The certified financial planner designation is held by a large portion of advisors who work with financial planning firms, investment dealers and independent financial advisory practices.
“There are almost 18,000 CFPs in Canada,” says Cary List, president and CEO of the Toronto-based Financial Planning Standards Council, which confers the CFP. List recommends the CFP — which takes a technical approach to financial planning — for advisors who are focused on helping clients deal with their life-long financial goals.
Registered financial planner (RFP)
The registered financial planner designation, significantly less common than the CFP, demonstrates an advisor’s commitment to comprehensive financial planning, according to Karen Hall, Calgary-based communications chair with the Institute of Advanced Financial Planners “I believe that with the RFP there is a higher level of accountability for what you do,” Hall says.
Candidates seeking the RFP designation must create a financial plan, which is then reviewed by peers. “Getting the designation confirms the fact that there are other financial planners who acknowledge that this person can make a quality financial plan,” Hall says.
Personal financial planner (PFP)
The personal financial planner designation demonstrates an ability to build a comprehensive financial plan, according to Toronto-based CSI Global Education Inc. The program covers how financial instruments, ranging from insurance to real estate, can be used to optimize a client’s situation. And it provides an overview of legal matters and taxation issues.
“The PFP is valued within the banks and brokerages,” says Marshall Beyer, senior director of academic standards at CSI. The PFP program was developed with input from financial institutions, and many planners who work at banks hold the PFP.
Chartered life underwriter (CLU)
The chartered life underwriter designation complements the CFP by providing extra education in wealth transfer and estate planning.
“A CLU is best suited for somebody who wants to do a lot of work in estate planning,” says Terry Zavitz, chair of Advocis, the Financial Advisors Association of Canada, “so they want to work with their clients on wealth, buy/sell agreements and the impact of taxation.”
Holders of the CLU are trained and qualified to identify and fix estate problems through knowledge of advanced taxation and legal issues. You would learn about the impact of taxes on estate planning and develop an understanding of legal issues, such as how wills are made.
> Portfolio management designations
Canadian Investment Manager (CIM)
If you want to be a discretionary portfolio manager you are required to hold either a Canadian investment manager or a chartered financial analyst designation. Both designations signify competence in investment and portfolio management, but most advisors opt for the CIM, which has a less rigorous training program.
“The CIM is targeted toward portfolio management, whereas the CFA also gets into matters such as research analysis,” says Marshall Beyer, of CSI Global Education Inc., which confers the CIM. Advisors who hold the CIM understand clients risk tolerance, have learn about different types of investments and know how to construct and rebalance an investment portfolio.
The CIM focuses on the Canadian marketplace. “We get into compliance aspects and we spend a lot of time talking about products available in Canada,” Beyer adds.
Chartered financial analyst (CFA)
The chartered financial analyst designation focuses on investment management, analysis and ethics. It is arguably the most difficult financial designation to acquire. The course usually takes several years to complete and covers three stages, each culminating in a six-hour examination.
One of the most distinctive features the CFA is its portability, according to Stephen Horan, head of professional education content and private wealth at the CFA Institute.
“We are a global designation so the program and the exam is the same whether you are in Canada or in Cambodia,” Horan says. “For example, rather than focusing on specific tax rules, our program develops general models that illustrate how taxes affect investment decisions, so that you can take the rules that exist in any jurisdiction and apply them with our model.”