Canada has no shortage of financial advisors, but some investors complain that it is hard to find an advisor who isn’t just a mutual fund salesperson. No doubt good advisors exist, but perhaps they are in short supply because of the requirements to get a designation.
Mike Holman described the requirements to get 4 different designation levels. The requirements for the top two levels caught my eye. In addition to having to pass exams, becoming a Certified Financial Planner (CFP) requires “two years of direct financial planning experience,” and becoming a Chartered Financial Analyst requires “four years of related investment experience.”
Why not make the testing more stringent and reduce the time component? The answer is that these rules are designed to protect those who already have the designations from competent competitors. With these time requirements it’s almost impossible to hold these designations for part-time work no matter the competence of the candidate.
This criticism can be made of most professional designations in other fields as well. It is very common for entry to professions to involve requirements that keep out anyone who isn’t 100% personally committed to working in the profession no matter how good they are at the work. In this case the side effect is investors facing an apparent shortage of fee-only financial advice.