If you’re looking for a financial advisor or planner, learning about their credentials can help you choose the right one for your needs.
Working with a financial advisor or financial planner can help you understand your financial picture and improve your financial well-being—but first, you need to choose the right one for your needs and goals. Let’s look at what financial advisors and planners do, what credentials they may have, and how to choose the right one for you.
Many Canadians use the terms “financial advisor” and “financial planner” interchangeably, but advisors and planners may provide a range of services and specialize in different areas. Certain provinces have rules around who can use these titles.
Financial advisor or financial planner—what’s in a name?
As of March 28, 2022, only people who have earned certain credentials from an approved credentialling organization can use the titles “financial planner” and “financial advisor.”
- Certified Financial Planner (CFP) Qualified Associate Financial Planner (QAFP)
- Chartered Life Underwriter (CLU)
- Personal Financial Planner (PFP)
- Registered Retirement Consultant (RRC)
- Professional Financial Advisor (PFA)
- Designated Financial Services Advisor (DFSA)
- Registered Financial and Retirement Advisor (RFRA)
- Registered Retirement Analyst (RRA)
- Individuals in Ontario using the title “financial planner” or “financial advisor” before Jan. 1, 2020, have four years or two years, respectively, after March 28, 2022, to confirm that their credentials meet the criteria of the Financial Services Regulatory Authority of Ontario (FSRAO) or to obtain an approved designation or licence. Anyone who began using these titles after Jan. 1, 2020, must hold an approved designation or licence.
Only certain trained individuals can use the title “financial planner” (in French, planificateur financier or “Plan. Fin.”): planners who have a certificate issued by the Autorité des marchés financiers and are members of a professional association with which that organization has an agreement.
Rest of Canada
Anyone can call themselves a financial advisor or financial planner, so check qualifications carefully.
What do financial advisors and planners do?
Financial advisors and planners are not one-size-fits-all. You’ll see a range of titles and credentials that indicate what different financial professionals do. For example, investment advisors primarily give investment advice, and comprehensive financial planners consider all aspects of your financial situation when creating a financial plan.
Both planners and advisors can help you and your family with a wide range of money matters, including financial planning, estate planning, investing, insurance and mortgages. Looking at advisors’ credentials or designations can help you determine what they focus on.
“The designations that someone might look for is going to vary given what their situation dictates,” says Aaron Hector, a CFP and private wealth advisor at CWB Wealth in Calgary. Registered Financial Planners (RFPs), for example, have a high level of financial planning expertise, and their primary vocation is financial planning. A CFP will also have high expertise in financial planning with a depth of knowledge and skills. (More on credentials below.)
“Many financial planners are generalists—they have a comprehensive body of knowledge about all aspects of personal finance, but they may lack niche financial expertise to deal with unique and/or very complex situations,” says Hector. “In those cases, you would want to look for someone who has those unique skills, or as an alternative, working with a financial planner who is comfortable collaborating with other professionals.”
Many financial planners have expertise in working with certain types of clients. “For example, some planners may specialize in working with clients who are business owners, while others may specialize in estate, tax or cross-border financial planning knowledge,” says Hector. He adds that planners often have a network of experts they collaborate with, if needed for a client’s situation.
How are financial advisors and planners paid?
Both advisors and planners may offer one-time and ongoing services, with varying fee structures. One-time services might include preparing a financial plan or providing advice on a particular situation. Ongoing services could include continual reviews of your financial plan or management of your investment portfolio.
“A do-it-yourself individual would likely look for someone who can create a plan that they can then implement on their own, whereas someone else may want to work with an advisor who will manage their investment portfolio for them, and that advisor may charge based on assets managed or based on commissions,” explains Hector. “Someone who needs insurance will have to work with an insurance advisor, who will receive a commission.”
Whatever the service, the fee structure should be transparent, and you should understand the different ways your advisor gets paid, to ensure that your interests and theirs are aligned. “If your advisor is getting paid more to recommend one product versus another, then there is a clear conflict of interest,” explains Hector. “I would ask them to very clearly explain to you why it is also in your best interest.”
What credentials do financial advisors and planners have?
Before you choose a planner or an advisor, it’s helpful to understand the different types of credentials or designations.
These are common designations held by financial advisors and planners:
- Certified Financial Planner (CFP): To earn a CFP certification, candidates must complete an education program, pass an exam and have three years of qualifying work experience. Learn more from the Financial Planning Standards Board (FPSB).
- Qualified Associate Financial Planner (QAFP): This certification option is for financial planners who want to serve a broad market or gain recognition for qualifications along the path to becoming a CFP. Learn more about QAFPs from FP Canada.
- Registered Financial Planner (RFP): Financial planning is an RFP’s primary vocation. (Other designations allow practising financial planning as a side business.) RFP candidates have at least three years’ experience in financial planning and a bachelor’s degree from an accredited university or an equivalent. Learn more from the Institute of Advanced Financial Planners (IAFP).
- Personal Financial Planner (PFP): This credential is for comprehensive financial planning. PFPs are approved to use the “financial planner” title in Ontario. Learn more about PFPs from the Canadian Securities Institute (CSI).
- Financial Planner (F.Pl.) (Quebec only): Financial planners, or planificateurs financiers, analyze clients’ financial situations to develop personalized action plans and, if needed, refer clients to specialists. Candidates must complete an approved university program and pass an exam to receive their diploma. You can learn more from the Institut québécois de planification financière (IQPF).
In addition to the designations above, a financial advisor or planner may have these:
- Chartered Financial Analyst (CFA): CFAs specialize in investment analysis and consulting, wealth management, financial research, portfolio management, investment consulting, risk analysis and risk management. Learn more from the CFA Institute.
- Certified Financial Planner (CFP) (U.S.): These CFPs help clients manage various aspects of their finances such as retirement, investing, education, insurance and taxes. Learn more about the CFP (U.S.) designation from the CFP Board.
Trust and Estate Practitioner (TEP): TEPs specialize in inheritance and succession planning, trusts and estates. If you need a comprehensive financial plan plus a thorough examination of your estate, consider an RFP or a CFP who’s also a TEP, says Hector. Learn more from STEP Canada.
- Family Enterprise Advisor (FEA): An FEA is knowledgeable about the complexities of family-owned businesses. Learn more from Family Enterprise Canada.
- Chartered Life Underwriter (CLU): CLUs specialize in life insurance and estate planning, and they’re proficient in risk management, insurance and wealth transfers. Learn more from The Financial Advisors Association of Canada.
What should you ask a potential advisor or planner?
Designations aren’t the only thing to consider when choosing a financial advisor or planner. To find a good fit for your needs, it’s a good idea to interview a few candidates.
Hector recommends discussing the advisor’s services, work experience and planning process, as well as asking to see sample financial plans. Find out how the advisor is paid and by whom, and be wary of anyone who leads with product sales before they know your financial situation.
“During the interview process, you should be able to get clear answers to your questions. If it seems like they are withholding something or can’t answer a question in a way that makes you comfortable, then that would be a bit of a red flag,” he says.
To maintain their designations, advisors and planners must complete annual continuing education requirements and attest to upholding a high level of moral and ethical standards. “For each designation, consumers are able to search a member directory to ensure that their advisor is in good standing with the governing body,” says Hector. For example, for investing advisors licensed by the Investment Industry Regulatory Organization of Canada (IIROC), you can check its website.
To narrow down your search, check out the MoneySense Find a Qualified Advisor Tool. The advisors in the tool are members of the Financial Planning Association of Canada (FPAC), and they hold at least one of the designations listed above.