maybe its the difference between the U.S. and Canada.
in Canada, to become a PM, you need the CFA or the CIM plus a bunch of courses. you may as well get the CFA because it is recognizable and respected compared to the CIM which is not. so basically to run a good sized book in Canada, you need your CFA. and if you don’t absolutely need it now, you likely will absolutely need it in 10-15 years when the CIM is either done away with or CIM is further supplemented with far more exams and other requirements. i’m not sure about the U.S. ways around the CFA for the PM requirement as i’ve only ever needed my CFA to advise on a discretionary basis in the U.S. and i don’t know anybody who is doing otherwise.
there is no such requirement to get the CFP. the only benefit that getting the CFP brings is that you are officially allowed to call your financial plans a financial plan but us non-CFPs are forced to call them financial projections. avoiding this wordplay is not worth getting the CFP. in my firm, which is actually a U.S. firm in Canada, there are more CFAs in lead advisory roles than CFPs. the reason is because they are PMs and manage money on a discretionary basis. these are not all HNW guys. many of them run something like 250-1000 households at an average of ~$400k.
most offices in Canada will have a few CFAs running the books, plenty of hacksaws for support and a couple CFPs for estate planning and insurance sales.
My old boss (an MD) closes 8 figure clients on a very regualr basis, and operates in the UHNW market. No CIM, no CFA (his business partner has the CIM) and is killing it right now. He runs a great business and is an excellent communicator.
Unforunately clients don’t really care (most all of the time) what credentials you have. Its really about what you do for them in terms of their investments and wealth planning. I’m a CIM and PFP desingtion holder (both hacksaw) - and undergrad and MBA in business (both Finance major). Do I really need to do the CFA? (I don’t know…maybe, why?)
Most dealers (etc) ask for verification in using credentials. In order to provide financial planning advice - you need to hold a financial planning designation (PFP, CFP, RFP).
The issue is that the financial industry in general just has sooo many different way to purchase investments and access advice. You can go to the local grocery store and open up a PC Financial TFSA or whatever. Who you supposed to talk to about your investment strategy there…the produce manager?
^Maybe this is just a difference in countries and their securities laws.
If I’m not mistaken, Canada takes its securities licensing much more seriously. In the US, any idiot who graduated high school can take a Series 7 exam. (I’m living proof.)
In the US, the CFA carries very little legal weight, and gives very few exemptions from examinations. I think you’re exempt from having to take the Series 87 and the Series 65, but that’s about it. And it is certainly not “required” for anything.
The advantage of CFP is that it provides a basic knowledge of personal finance, including estate planning, income tax, retirement planning, and insurance. These things are not taught (at least not in any depth) on the CFA exam, and they are of far more importance than most “traditional” charterholders think. Plus, these are things that clients and advisors have far more control over, rather than the movements of securities and financial markets.
By no means am I suggesting that CFP is somehow a superior designation than the CFA. But I really don’t think that it’s going to do anything for a retail FA, unless he thinks that he can start working at the home office designing home office portfolios or something.
Again, @OP, look at the successful people around you. Do what they do. Do not do what they do not do. If none of them have the CFA, there’s probably a reason.
^ The U.S. is actually ahead of Canada in terms of regulations etc. Hell, we don’t even have a national regulator; securities law is considered a provincial jurisdiction (although we are working towards this).
In order to become licesned (IIROC firm) in Ontario, you need to pass the CSC, ethics handbook (a complete joke) and WME offered through the Canadian Securities Institute. Certaintly not a high bar at all. This is actually a big part of the problem in the financial services industry in general (in my opinion).
CFP and CFA compliment one another. The CFA can add value in the discretionary business model (Matt) uses (through PMAC as a PM) and likely spends most of his time on AM and delegates the planning (financial analysis, tax, estae etc) out to other specialst in the office (who have the CFP). And…there is certainly nothing wrong with that.
However, if your a retail FA, get the CFP first then if you really want to, get the CFA.
The CFA is much, much harder to pass than the CFP will ever be.
^ I’m currently trying to determine how to acquire the required practical work experience needed to earn the CPA in Canada as a self employed Financial Planning Advisor.
Definitely a disservice to the CFA designation to be comparing it to the CFP. CFP is all about retail finance. Not criticizing. Just an entirely different scope. If investment management was aviation, CFPs would work for Delta and charterholders would mostly be at Boeing, GE, and similar.
Mike79 - I was at a CPA firm when I got mine so it was easy, but have you considered preparing small/easy tax returns as an additional service? I would think this counts for the experience requirement.
^ We do prepare tax returns through another branch, but I don’t actually do them in my office. I make a referral fee (isn’t much) but I am considering it. The real benefit of earning the CPA (IMO) is that of the three advisors a investor client works with (FA, Accountant, Lawyer), the Accountant is usually seen as the most trusted etc.
In Canada they recently merged 3 different Accounting designations (CA, CMA, CGA) into a new stream (CPA). I just emailed CPA Ontario to find out if someone can provide some more direction and advice. I wouldn’t want to spend all the time and money on the courses only to find out later on that I come up short on the work experience.
I was an IA and it totally overkill to have a CFA if all your clients are retail. In fact, the bank i worked for discouraged people from getting it because they’d rather you spend your time cold calling.
I think it’s worth a shot Mike if you can get the experience down. People do trust their accountants. I’ve found it helps when dealing with clients who own their own businesses as well in coming to you for advice.
Many Accountants are happy to prepare the tax returns, make filing etc but don’t really get into providing tax advice to their clients. Clients want advice on how to save on tax, save on fees, etc. (Here they’re an ‘order taker’)
Here’s a good example. I recently signed up new investment clients earlier this year. During my discovery process, I found out that they have had 4 Accountants in the last 12 years. Obviously I was concerned about this and asked them to “tell me more”. Basically, it kept boiling down to the client saying “we kept asking for advice and the Accountant just didn’t advise on the topics we were asking about” - hence they kept changing Accountants
The Accountant should see the value of the Advice you provide, as a FA/ Financial planner and how the client will benefit from having a co-ordinated and integrated investment strategy and wealth plan that addresses all their wealth planning needs. The Accountant would be willing to introduce you (as the FA/ planner) to his tax clients as a prospective client for you, and sit with you and their client for a introductory discovery meeting.
the big problem with an accountant working out of an FA office is that the accountant probably isn’t very good or he’d go make bank at a Big 4 firm. making money in accounting really isn’t very hard if you’re any good so why would a good accountant take such a big chance? what this tells me is that any accountant working out of an FA office is likely not very good and that’s why he’s there. and he leaves upon receiving a better offer (whether it be more comp or more security). we know accountants are naturally risk averse so of course they choose to work for Big 4 rather than strike out on their own and fight for dinner like us FAs.
