Canadian Financial Advisor Qualifications and Courses

by Mike Holman

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There are many things you should consider when choosing a financial advisor.  One of the items is their academic training.  Would you rather be advised by someone with the minimum amount of qualifications or someone who has made the effort to take extra financial planning courses?  Unfortunately, in Canada it is possible to become a “mutual fund salesperson” with very little training.

Depending on what you want from your advisor, their qualifications might or might not be important to you.  If you want to quickly set up an RESP account at your local bank, the in-branch investment specialist will probably be good enough.  If you are looking for advice on retirement planning including tax and estate issues, then you will want someone with more knowledge.

I’ve listed four common financial planning courses and designations.  When you are researching potential advisors, ask what courses they have taken.  Another idea is to ask when the last time they took any kind of training.  If they haven’t done any training in a while, ask how they keep up with recent changes in taxes, laws etc.

As Dr Rathgeber pointed out in the comments – don’t forget that just because someone has qualifications and knowledge, doesn’t mean they will use it for your benefit.

There are many other courses that are available – feel free to list any in the comments if you think they should be mentioned.

CFP – Certified Financial Planner

This is the only course listed that I haven’t completed any part of.  It is a very demanding course with two lengthy exams.  Basically you have to take the course approved by the Financial Planning Standards Council.  Then you write the exam and pray that you pass.  In order to get the actual CFP designation, you need three years of direct financial planning experience.

The material is quite extensive and covers all the various financial planning areas such as taxes, retirement, estate, investment planning.

I would suggest that if you want to hire a financial advisor that the CFP is the main designation that you look for.  It really encompasses all the subject areas necessary for financial planning.

CFA – Chartered Financial Analyst

The CFA designation is more appropriate for investment management, rather than financial planning.  Portfolio managers, investment analysts are the key jobs for this designation.  It is however, fairly common for CFA graduates to become financial planners. I would say this is the hardest designation to get – you have to write three lengthy exams and have four years of related investment experience.

Back in a former lifetime, I passed the first level of this exam.  I did the reading for the second level, but due to a career change – I never completed the 2nd level.  I’d love to get this designation now, but you need several years of investment experience to get the designation, which I can’t get with my current job.  It’s not worth the effort and money if I can’t get the actual designation to brag about.  :)

PFP – Personal Financial Planner

This PFP is a Canadian program offered by the CSI (Canadian Securities Institute).  I’m not personally familiar with this course, but apparently it is popular with bank employees.  It is a CFP qualifying course which is a definite vote of confidence.

FCSI – Fellow, Canadian Securities Institute

This section was provided by reader JT

FCSI is Fellow, Canadian Securities Institute. As you can probably guess from the name, it’s the CSI’s highest level of recognition and its requirements are the most demanding.

To get it, you need to complete:

  • One of the CSI’s accredited designations: CIM, CSWP, FMA (although this has been being discontinued);
  • One additional course (easily satisfied by completing the CPH)
  • One ethics module

In addition, you need a testimonial from an existing FCSI holder and need to satisfy certain CE requirements.

Despite the list of requirements, it’s not *that* much work for a career advisor. I think you’ll find this designation should be pretty widely-held amongst full service advisors.  It’s unlikely that someone selling mutual funds in a bank branch would have it, though.

CSC (Canadian Securities Course)

This course is a much harder course than the IFIC.  The material is more detailed and there is a lot more of it.  I remember thinking that this course wouldn’t be a lot of work, but I was wrong.  The CSC covers all the material from the IFIC plus topics like stocks, options, and bonds.

For any job involving investments other than mutual funds, the CSC is usually mandatory.  A broker’s assistant would need this, call centre employees for discount brokerages should take this.

For investors – this is a decent course to take.  It’s a fair bit of work, but you will learn quite a bit.

This course is self-study with a written exam.  It is suggested that 135-200 hours of study are necessary and I will agree with that.

IFIC – Investment Funds in Canada

This course is the easiest financial planning course available.  It is the minimum qualification to sell mutual funds in Canada.  How easy is it?  I wrote the exam without studying and passed easily.

The IFIC is suitable for a beginning investor, however I’m not sure if it’s worth the money given the plethora of financial advice articles on the web.  It covers basic financial planning and mutual funds.  If your (future) job involves selling mutual funds or giving advice on mutual funds then you will need to take this course.

More information

Check out my post on how financial advisors get paid.

Canadian Penny Stocks Blog wrote a good analysis of the CSC – Is the Canadian Securities Course For You?

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{ 20 comments… read them below or add one }

1 Steve Zussino

Mike,

Thanks for the detailed descriptions. I would love to give financial advice to Canadians (help with their debt and savings strategies), money coach.

I am going to move forward with the CSC (only problem is I am not sure I would have enough credentials).

What do you think?

2 Mike Holman

Hey Steve, I think “money coach” is another way of saying “I’m not officially qualified”.

That said, a lot of people need help with really basic things, so if you can help them – go for it. I think the main thing to watch out for – is not recommending specific investment securities.

The CSC is certainly a good start. For coaching, the hard part is coming up with the curriculum.

This article is an excellent description of money coaching:

http://www.milliondollarjourney.com/common-q-a-about-financial-coaching.htm

3 Steve Zussino

Thanks Mike. You are a great expert and have nice insight.

I really appreciate it.

Steve

4 Dr Dale Rathgeber

Great post; but too many mf sales people hide behind their CFP designations and act like used car salespersons.

5 Mike Holman

Dale, that point is so good I’m going to add it to the post.

You’re absolutely right – just because someone has qualifications and knowledge, doesn’t mean they will use it for your benefit.

6 Mike Holman

Just got an email asking about the FCSI designation. I’m not familiar with it, but fcsi.ca has info on it. Looks legit.

Does anyone know anything about the FCSI?

7 Jeff

Also, a designation worth mentioning is the PFP (Personal Financial Planner) Offered through the Canadian Securities Institute. It has a very similar curriculum to the CFP and is getting more and more well know. I think you will find Bank Financial planners having this more and more as most banks prefer sending employee’s through CSI. I personally think the CFP is a better designation only because it is internationally recognized. I am just finishing my PFP as I work for a Canadian Bank and dont plan on leaving Canada…. Ever!

Another main point when deciding on a Financial Planner is to be sure and review their compensation with them. They are industry required to tell you how they are paid, and if its based on MF recomendation or Credit referals (To mortgage brokers and such) keep looking around. Most Bank FP’s are Base Salary + commission based on overall profitability of you the client. This is primarily won by having their entire banking relationship, which means good advice.

Just my $0.02

~Jeff

8 Mike Holman

Thanks for the great info, Jeff!

It looks like the PFP is a CFP qualifying course, which is a definite vote of confidence. I’ll add it to the post.

Re: compensation- I should have linked to my recent advisor comp article:

http://www.moneysmartsblog.com/how-financial-advisors-get-paid/

9 Dr Dale Rathgeber

@Mike; It seems that my comments are better than my typing/spelling.
Keep up the great work!

Canadian Investors are fortunate to have bloggers like you to help safeguard themselves, and their hard-earned savings from unscrupulous salespersons.

10 Steve Zussino

Jeff,

PFP – is a great idea that might meet my needs.

Thanks.

Steve

11 Financial Cents

Great overview Mike. I’ve been curious about the CSC course. Potentially something I’ll pursue down the road.

12 JT

“Does anyone know anything about the FCSI?”

FCSI is Fellow, Canadian Securities Institute. As you can probably guess from the name, it’s the CSI’s highest level of recognition and its requirements are the most demanding.

To get it, you need to complete:

* one of the CSI’s accredited designations: CIM, CSWP, FMA (although this has been being discontinued);
* one additional course (easily satisfied by completing the CPH)
* one ethics module

In addition, you need a testimonial from an existing FCSI holder and need to satisfy certain CE requirements.

Despite the list of requirements, it’s not *that* much work for a career advisor. I think you’ll find this designation should be pretty widely-held amongst full service advisors. It’s unlikely that someone selling mutual funds in a bank branch would have it, though.

Hope this helps.

13 Natalie MacLellan

Great post Mike. You might also want to consider adding the Conduct & Practices Handbook Course (CPH) available through the Canadian Securities Institute. Combined with the CSC it makes up the basic requirements for a financial adviser to be registered and advise on securities. (No matter how many courses you have taken, or how many letters are after your name, you still need to be registered to work as an adviser!)
Also, note the difference between stand alone *courses* (CSC, CPH, IFIC), and programs like the CFP, PFP and FCSI which lead to a designation, but require many courses and often years in the industry to qualify.

14 Mike Holman

@Natalie – good suggestions to categorize the single courses vs programs. I didn’t include the CPH since it’s not really a financial course, although as you point out – advisors have to have it. I’ve taken it and it’s super easy.

@Dr – Thanks!

@JT – Thanks for the info. I added it to the post.

15 The Passive Income Earner

Nice post!

I borrowed the books from a friend for the CSC course. It’s quite a stack I must say. I was quite interested in taking it but it’s difficult to find the time at the moment. It was purely for personal interest but then I also look at what a change in career would look like but the change would have meant a step back in paycheck at the beginning.

16 Financial Advisor

Actually its even worse than you stated; Canada does not regulate “financial planning” so there are actually no minimum requirements for someone to be able to call themselves a financial advisor. This is why asking for qualifications is so important. Personally I would have a difficult time rationalizing using anyone without CFP certification as my advisor.

17 Adam

I have been in the industry for over 20 years, and wanted to clarify the previous posting or discussions containing the CFP, PFP and CFA designations. Be cautious when discussing PFP as a designation or a course. There are many bankers who have passed the old PFP course but technically are not PFP designated. This is a relatively new designation and is not the same as the PFP courses that CSI used to offer.

The new PFP designation is actually not the prerequisite for the CFP. PFP contains multiple courses with two of them named Financial Planning 1 and 2. These are only courses and do not provide you with the PFP designation upon completion. The PFP designation, like the CFP, requires the same prerequisites plus an additional course in Financial Planning Advisory Services. When you complete all the prerequisites, you then proceed to take the final exam which is now structured quite similar to the CFP (2 x 3hr exams). This final exam is called the Applied Financial Planning exam and as a CFP and PFP (new designation) holder, I can say the exam is parallel in difficulty especially since the AFP2 exam is a written only exam (no guessing). I would agree many CFP individuals would discredit the PFP exam; however, they probably haven’t taken the new PFP course offered by CSI. The AFP exam is not to be overlooked.

The one advantage with the PFP is that the exam is much more relaxed and it is offered very frequently; however, you are only provided 2 chances for the exam. It is unfortunate that there are so many designations available. The difficulty in the CFP exam is the fact you must wait an excessive amount of time to take the exams causing it to appear more difficult to obtain.
Both the PFP and the CFP are good and similar designations in my book, but the one and only true designation for all matters finance is the CFA.

18 Hugh Murphy

Adam…

Your suggestion that “the one and only true designation for all matters finance is the CFA” will confuse many that may be looking for guidance.

The prospect of having an individual that has taken the time to complete their CFA offering financial planning guidance to a retail consumer is almost absurd.

For the purpose of valuing securities, building and managing investments portfolios, understanding financial markets and instruments and the economics and statistics that sit behind these matters, CFA designation holders have studied for at least three years. I know from my own experience. HOWEVER, in accomplishing this, they move to another place in the world of finance…a place where 96% of retail investors can neither understand the language nor the basis of the conversation. (If there’s any question about this, ask 10 consumers to discuss the implications of various approaches to estimating the WACC for us in a multi-stage discounted cash flow valuation model… or the limitations of Markowitz’s original portfolio theory in light of findings from studies of behavioural economics. You’ll get a blank stare from all ten, I promise.)

CFP designation holders — and PFP designation holders, too — are the effective bridge between the land of the CFA holder and the world of the retail investor. Planners are all about understanding the retail investor’s needs and satisfying those needs with combinations of solutions and instruments that are built by the financial engineers that hold the CFA designation.

The planner’s role is as a guide for the retail investor; as the professional that helps the consumer decide what combination of (financial) vehicles will get him from his current state to his final destination most effectively.

The financial analyst’s role is as the engineer that builds the various (financial) vehicles that the planner and retail consumer will use together during their travels from their current position to their future (financial) destination.

Think of the CFP as an arts degree where you have to take a few compulsory science courses…and the CFA designation as the science degree where you have to take a few compulsory arts courses. The two degrees prep you for related, but very different things. And you need people that have both. Without planners, the retail investor stands naked and unstable. Without CFA holders, the financial system is similarly unstable. (Of course, there’s a case to be made that the CFA holders are as much the cause of instability as they are the solution…but that’s another matter!)

HJM

19 Passionate about Finance

Hi Mike,

I found your overview of the different designations quite useful. I am a fourth year finance undergrad, and I was thinking of starting a blog or newsletter about sharing investing ideas, market commentary and security analysis, and I am wondering if I need any of the above courses/designations to be able to do so? Would you know where I can get more information?

20 Derek

If you would like a fair comparison of the PFP and CFP this article does it well: http://www.theglobeandmail.com/globe-investor/personal-finance/financial-advisers-a-tale-of-two-certificates/article4083578/

I like where it highlights that the CFP is awarded in Canada by the FPSC, a not for profit organization. Whereas the PFP is administered by CSI, who is owned wholly by Moody’s analystics a publicly traded for profit entity. Who might you think has the interests of the Canadian public best aligned?

As both a CFA chartholder and a CFP professional I can tell you that these two designations serve very different purposes – while they can pair extremely well together depending on the market one serves – they by no means can be substitutes for one another. Comparing the two is apples and oranges and neither was designed to meet the same need. If you are considering someone for pure investment analysis or considering who is managing your money and analyzing potential investments via a mutual fund than you would be wise to consider CFA chartholders. If you are wanting to work with someone to help you with all aspects of your finances, not just investments, someone to develop a full financial plan and integrate all the components – then you should be working with a CFP professional.
If you have at least a million dollars in investible assets, would like to have someone manage on a discretionary basis, but would also like to have your investment plan integrated with your overall financial well being – I would suggest you seek someone who holds both the CFA, CFP designations.

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