Archived Career Q&As

The following Career Q&As were chosen from the correspondence between members of the general public and our panel of experts. Please browse this section to see if any of your questions are answered here. If you wish to ask a new question, please go to the Career Centre.

• What is the difference between a licence and a designation in the financial services industry?
• What is the difference between a CFA and a CFP designation and why should I opt for one versus the other?
• As a Certified Financial Planner professional, do you only focus on the sale of investments, mutual funds, etc.?
• What is the most important thing you can do to be a good advisor?

Q ­What is the difference between a licence and a designation in the financial services industry?

Answer provided by Cary List, CFP, CA, Vice-President, Professional Standards & Certification, Financial Planners Standards Council

A ­Generally speaking, when the term "licence" is used in any industry, it refers to a licence to practice in a certain area or to sell a particular line of product where that industry is regulated by law. In the financial services industry, at present, the right to offer financial advice or to practice as a financial planner is not regulated, and therefore you do not need a licence to call yourself a financial advisor or a financial planner.

What is regulated is the sale of certain products and the right to offer certain product-specific advice, including mutual funds, securities and various types of insurance. That is why, if you would like to sell any of these products, or give advice on specific mutual funds, stocks, bonds or insurance contracts, you need a licence to do so. None of these licenscs represent designations - they are actually legal licences that permit you to sell, or give advice about, the specific products for which you are licenced. Various licences are regulated by various organizations and subject to various rules of education, experience and examination.

A designation is often, but not always, voluntary. In many industries, the licence to perform a particular job is actually tied to a specific designation or group of designations. For example, only individuals holding the C.A., CGA or CMA designations are entitled to call themselves "accountants," and only C.A.s or CGAs can sign audited financial statements. In the accounting world, the designation and the licence to practice as an accountant are one in the same. In the financial services industry, this is not the case. The decision to pursue a designation, the CFP (Certified Financial Planner) for example, is currently voluntary, unless of course an employer chooses to require that you have the designation for employment.

Why then, would you choose to pursue a designation if it is not required to do your job? There are many reasons - to further your own education, knowledge and skills in the performance of your job, to distinguish yourself from your peers, or simply to demonstrate that you can achieve the standards of excellence defined by that designation. In many industries where regulation does not exist - financial planning for example - the designation - the CFP for example - actually becomes the de facto licence by virture of the fact that if you don't hold the designation and all of your peers or competitors do, you will not get clients and therefore not be in business.

Now, a slight spin. You may be aware that individuals holding the CFP designation are actually "licensed" to use the CFP designation. This is where you may have had some confusion. This type of "licence," i.e. the "licence to use the CFP, is a licence by FPSC to use a trademark - that trademark being the letters "CFP" and the term "Certified Financial Planner." This is a different type of licence - one that doesn't relate to a licence to practice, but rather a licence to use the mark or marks of the designation itself. Adding to the confusion is the fact that some designations are trademarked and others are not.

Q ­What is the difference between a CFA and a CFP designation and why should I opt for one versus the other?

Answer provided by Tina Tehranchian, CFP, Assante Capital Management Ltd.

A ­The CFA designation focuses on investments and is suitable for analytical and research oriented individuals who want to pursue a career in a corporate environment and are interested in portfolio management, whereas a CFP designation is more broad based and covers investments as well as estate planning, retirement planning, and personal financial planning and is more suitable for individuals who have good people skills and enjoy helping others and interacting with clients. Also with the CFP designation you have a choice of working for banks and big brokerages or being an independent practitioner and having your own business.

Answer provided by Earl O'Neil, CFP, Macleod-Lorway Financial Group Ltd.

A ­ When I do a financial plan for people, I look at their life insurance needs, retirement needs, children's education needs, etc. When I start developing the Big Picture for them, I also start to help them prioritize their situation. Most people cannot afford to implement every solution that I develop for their unique situation. Therefore, some choices usually have to be made as to which solutions we're going to implement immediately and which we will look at down the road.

Answer provided by Bradley Roulston, CFP, Roulston Financial Group.

A ­ Give back to the industry and the community as much as you can. Be involved and try new things, don't let other people put limits or expectations on you. Remain flexible and open to new ideas. As a young planner, this is totally our advantage. Also, get as much education/courses/designations early in the game.