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CFP? PFP? CFA? Why is it so hard to pick an adviser?

A CFA designation takes about three years of intense study, but a CSA can be completed in four days. How can consumers make smart choices?

Yury Minaev/Getty Images/iStockphoto

I've always thought that if you really knew what you needed to know to pick the right financial adviser, you probably wouldn't need one.

While there are plenty of investors who navigate the stock and bond markets on their own, there are plenty more who won't for a variety of reasons. They might be overwhelmed, intimidated, uninterested, or what have you. Therefore, most Canadians will eventually need a financial adviser, whether they want them or not.

Picking the right financial adviser for your own situation means knowing the difference between all the different types of financial advisers out there. It means knowing about the various potential conflicts of interest they are exposed to given their compensation models. And because there is no single regulating body, and no university undergraduate or graduate program for financial advice, the disparity in knowledge level among advisers is immense.

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So how does a regular Canadian pick an adviser?

The industry has offered some help: designations. Advisers can self-study and there way to numerous designations they can stick behind their names. If there was one that was the most recognized, it would be the CFP designation (Certified Financial Planner). But there are so many possible designations, you could almost put the entire alphabet behind your name.

Here are some other examples:

  • CLU – Chartered Life Underwriter
  • PFP – Personal Financial Planner
  • RFP – Registered Financial Planner
  • CFA – Chartered Financial Analyst
  • CSA – Certified Senior Advisor
  • EPC – Elder Planning Counselor
  • MTI – Member, Trust Institute
  • Ch.P. – Chartered Professional of Strategic Wealth

These are just the tip of the iceberg. A CFA designation takes about three years of intense study, but a CSA can be completed in four days.

I have my own views, but let's get some reader input:

Have all the possible financial adviser designations diluted the value of any single one of them?

Which designations should investors care most about?

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Which designations should investors care the least about?

Give us your thoughts in the comments section, and in our next blog we'll break down the most (and least) useful designations.

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About the Author
Personal Finance columnist

Preet Banerjee is a consultant to the financial services industry. You can follow him on twitter at  @PreetBanerjee. You can find his conflict of interest disclosure on his website. More


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