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rob carrick

Here's a story of how far the financial advice industry has to go to be considered a serious profession and not a bunch of competing salespeople grabbing for your business.

CSI Global Education Inc., a company that runs most of the training courses in the financial industry in Canada, has just started a marketing campaign to buff up the image of three of its designations. People aspiring to work for banks, brokerage firms, mutual fund companies and such pay thousands of dollars to earn these designations, so there's a business case for promoting them.

What's best for customers of the financial industry is a different story. They would benefit from having a single, universally recognized designation for financial advice providers, but the CSI marketing campaign highlights how far we are from that happening.

Of the three designations being highlighted by CSI, one covers portfolio managers (the Canadian Investment Manager, or CIM), and one covers providers of financial advice to high-net-worth individuals (the Chartered Strategic Wealth Professional, or CSWP). No issues there.

It's the third designation, the Personal Financial Planner, or PFP, that's the problem. About 15 years ago, the PFP was developed by the banking industry for use by staff providing financial advice to customers. Never a top-tier designation, the PFP was revamped after the CSI took over the banking industry's financial training organization about three years ago.

The result is a new PFP. "We feel we've kind of raised the level," said Marc Flynn, Montreal-based vice-president of regulatory relations and academic standards for CSI. "PFP is growing up, if you want."

A tougher PFP is an improvement. You now have to meet continuing education requirements to remain a PFP in good standing, and adhere to a code of ethics.

The problem with the PFP is that it's redundant. The Certified Financial Planner, or CFP, is bigger, better and an ideal designation on which to build a single accreditation for the professional adviser.

The CFP is administered by the Financial Planning Standards Council, which was founded in 1995 by a group of people who "believed that one designation in financial planning was in the interest of the consumer," said Cary List, the FPSC's president and CEO.

Today, there are roughly 18,000 active CFPs in Canada, which makes it the most popular financial-advice designation. The CSI says about 9,000 PFP designations have been conferred since 1995, but it's not sure how many people actively use the PFP today.

Another difference is that the CFP is administered by a non-profit organization, the FPSC, which has a mandate to ensure Canadians are well-served by financial advice. The CSI, which started out as an offshoot of the agency that regulates the brokerage industry, has been a profit-making enterprise since 2002. Just last month, it was bought by the bond rating agency Moody's.

Why the PFP Persists

CSI's Mr. Flynn said the big reason for continuing with the PFP is that the banking industry wants it. That's the designation many bankers now hold and, moreover, its curriculum is more tailored than the CFP to the needs of bankers.

To be fair to CSI, it's not promoting the PFP as the one, true designation. It's simply saying that designations are important and then highlighting the CIM, CSWP and PFP. But that's pretty much what Mr. List and the FPSC are doing with the CFP.

This leaves us with two designations in a situation where settling on a single one would be a milestone on the way to developing a profession based on providing advice and not selling financial products. Of course, that would require the financial industry to get together and compromise for the greater good of clients.

CSI's Mr. Flynn said it's possible something can be done to clarify things for clients trying to make sense of the CFP and PFP, but he talked more in terms of clarification of the existing designations than consolidation.

So, investors, you're left with PFPs, CFPs and a bunch of other designations more related to managing investments than providing financial planning. The good news here is that these designations exist at all. They suggest at least some level of training, and they're certainly better than no designations at all.

To keep things super simple, look for the CFP if you're seeking true financial planning and not someone to sell you mutual funds. The PFP is okay, but it's the No. 2 brand.

A guide to some planners' designations

Here are some of the designations that show a provider of financial advice has gone through a recognized training course.

The big two

CFP: The Certified Financial Planner is the most widely held designation and is overseen by the non-profit Financial Planning Standards Council.

PFP: The Personal Financial Planner is a designation that is held mainly by people in the banking industry


RFP: The Registered Financial Planner is a much less common designation, but still respected in the financial community.

CSWP: The Chartered Strategic Wealth Professional is a specialty designation for providers of advice to high-net-worth families and individuals.

Note the common use of the word planner here. It means financial planning should be the focus of services provided, not the sale of investments.