Financial Planning Designations: Who does what, and who do I need?

As if the financial planning and wealth management industry wasn’t already full of jargon, the certifications and designations behind advisors’ names simply add more confusion to the industry. These days there are numerous designations that advisors can get, but they don’t all add up to the same use or value for the client. Here are a few of the most common designations you’ll find in financial advising and management.

Common designations you’ll see in financial advising and wealth management:

Chartered Financial Analyst (CFA):

The Chartered Financial Analyst (CFA) is one of the highest distinctions in investment management. It is probably one of the most difficult, if not the most difficult designation to obtain within the financial industry. The CFA training program focuses on investment analysis and portfolio management, and provides deep knowledge of investment principles and ethics.

The main career paths are: Portfolio Managers, Investment Analysts and Wealth Advisors.
What they do: A CFA is heavily focused on investing in large-scale corporate situations, and the various investment tools and valuation of assets. Extremely analytical (stock picking, ratio analysis, economic analysis), investment management, portfolio management.
What they don’t do: Estate Planning, Risk Management, Corporate Strategies/Reorganizations.
Pros to engaging a CFA: CFA’s have been through stringent training and bring valuable knowledge to the table—not just in the nuts and bolts of finances, but in the ethics as well. When you’re looking for a financial advisor, these are key considerations.
Cons to engaging a CFA: A CFA may be harder to find (and more expensive) because of the intensive commitment required to complete the program of study, they also have a heavy focus on investment management, less so on financial planning.

Certified Financial Planner (CFP):

Certified Financial Planner (CFP) certification is the world’s most recognized financial planning designation and is considered the ‘gold standard’ for the profession. CFP professionals have demonstrated the knowledge, skills, experience, and ethics to examine their clients’ entire financial picture. The main focus of the credential is on helping individuals achieve their personal financial goals.

Career paths include: Financial Planner, Financial Advisor, Investment Advisor, Financial Consultant, Wealth Manager.
What they do: Financial Planning, they take a holistic approach to wealth management to ensure there are no gaps in one’s financial life (look at everything from estate planning, corporate strategies, risk management, tax strategies).
What they don’t do: CFP’s are heavily involved on the planning side, less so on the investment side. Similar to CFA’s being heavily involved on the investment side but less so on the planning side.
Pros to engaging a CFP: You should look to hiring a CFP for personal financial planning (ie. retirement, business exit, paying off debt).
Cons to engaging a CFP: You should not look at a CFP to construct you the ultimate portfolio. The CFP studies are based on planning. There is not a huge emphasis on the nuts & bolts of the actual portfolio. Remember that while complementary, portfolio management and wealth management are two different things.

Certified Public Accountant (CPA):

The Certified Public Accountant (CPA) credential is well established and is primarily utilized for careers in accounting. The curriculum concentrates heavily on accounting, taxes and audits. And the main focus for CPA’s will revolve – you guessed it right, around; audits, financial accounting, taxation and business concepts.

The typical careers are: Accountants, Controllers, CFOs.
What they do: Tax, auditing, financial accounting.
What they don’t do: Investment management, estate planning, risk management.
Pros of engaging a CPA: They are extremely knowledgeable in everything tax related (corporate strategies, tax saving strategies, financial auditing).
Cons of engaging a CPA: CPAs are really, really, really good at answering the question they are asked – but are you asking the right question? Accountants tend to be very linear and literal thinkers; if you’re looking for creative problem solving, you may need to look elsewhere.

Masters Business Administration (MBA):

Traditionally, the Masters Business Administration (MBA) was the most conventional path taken for career growth in business management. Typical programs require good grades to get in, can be quite expensive, and will offer a broad business and financial curriculum. The MBA offers a broad field of careers, spanning from marketing, to finance, and management.

Careers include: Manager, Director, Strategist, Consultant.
What they do: Corporate management.
What they don’t do: personal financial planning, estate planning, tax savings, risk management – more focused on the actual management of the business itself.
Pros of working with an MBA: MBA’s have a wide array of skills and can be a great addition to one’s board of advisors or to lead a firm to the next stage; they are great at running the actual business.
Cons of working with an MBA: MBA’s are one of the only designations not bound by a specific body – meaning whether you go to Harvard or take online classes, you receive the same three letters.

Chartered Investment Manager (CIM):

The Chartered Investment Manager (CIM) revolves heavily around investments. The CIM enables you to become registered with your provincial securities commission as a Portfolio Manager (Advising Representative or an Associate Advising Representative) and to be able to conduct discretionary portfolio management services for clients.

Typical careers are: Financial Planner, Financial Advisor, Investment Advisor, Wealth Manager
What they do: Portfolio management, investment management.
What they don’t do: Estate Planning, Risk Management, Corporate Strategies/Reorganizations.
Pros of working with a CIM: with the right work experience, CIMs can be registered with their provincial securities commission as Portfolio Managers – meaning they can do discretionary portfolio management.
Cons of working with a CIM: Your cons would really be contigent to your particular financial needs and complexities. You may choose to complement your CIM with an additional specialist, such as a CFA.

Trust and Estate Practitioner (TEP):

The Trust & Estate Planner (TEP) designation is an internationally recognized designation and is a way to formally identify qualified practitioners and distinguish them from “non-specialists” who occasionally deal with trusts and estates. The name gives it away here, but these professionals have a deep understanding of estate planning and trusts.

Typical careers are: Lawyer, Accountant, Financial Planners.
What they do: As the name says it, everything revolving around estate planning.
What they don’t do: Investment management
Pros of working with a TEP: everyone should look to hire a TEP at one point in their lives to help them construct a solid estate plan, they are the most knowledgeable when it comes to everything Trust & estate related.
Cons of working with a TEP: TEP’s mainly focus on estate planning, not investment management. Ensure you’re talking to the right expert for the right topic.

Which professional should you work with?

There is no one “right” designation or correct combination – it all depends on what your present and future goals are. This is where things can get confusing for clients. But remember, you need the right expert for the right job. Would you ask your dentist for advice about your diet, or ask your dermatologist to help with a bad back? It’s equally important to ask the right professional the right questions for your finances. This is where a qualified team can help ensure there are no gaps in your financial life.

One of the best options is a ‘family office’: a wealth management firm comprised of a multi-disciplinary team. A family office brings together expert advisors who work together, combining their expertises to provide action and advice from a range of perspectives. Our family office–IP Private Wealth–is built this way intentionally, so there are designated professionals on hand or on call to support any needs our clients have with regards to their wealth management, investments, corporate strategy, and goal-setting for the future.

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Richard Kluska, CIM®

Richard is the founder, CEO, and portfolio manager of IP Private Wealth. Richard has been in the financial service industry for over 35 years. He has believed in and promoted independent financial services from the company’s inception as a method to provide clients with true, unbiased advice in the area of wealth management. In the Ottawa area, he pioneered the Multi-Family Office approach to wealth management, creating a comprehensive network of professionals to assist clients in all aspect of their financial needs.