Financial Planning Talk

[heep223]

Originally Posted by theJuice

Hey guys, kind of a random question, but how important is a CFA in regards to being an Portfolio Manager? I'm not really too knowledgeable regarding alot of the titles in the finance world, but is it potentially a cause for concern or not really. I fall into the perhaps foolish view that having one as opposed to not having one simply means somebody is more qualified/better educated etc. Typically, I would have thought its always preferred. I will admit that when I was originally looking, that I thought it seemed more like a bare minimum that they needed to have, and not something that would set them apart from the other potential portfolio managers. Again, maybe I'm mistaken, and that it is something more important for financial advisers who I think are those who tell me how to spend my money/make plans for saving etc, whereas the PM is more doing the actual investing help?

I was discussing this with a friend, and the viewpoint they had was that my Portfolio Manager was more of a, I dunno, customer relations guy I was dealing with. Somebody I'm meeting once a year to kinda go over my plan, talk with briefly for like 15 minutes, and then never really speak with again for about a year. That they are not really "doing" most of the stuff behind the scenes, and thus in my case, them not having a CFA is not really that big of a deal.

I will say that it is at one of the main banks, and the account is a fairly large one with more than a million.

In short, having the CFA designation is very important in becoming a licensed portfolio manager. It's written right in the ASC's proficiency requirements to manage money.

However I was a bit confused by your post. The CFA designation is the "gold star" of the investment management world. That said, CFA charterholders don't have expertise in financial planning, estate planning, budgeting, life insurance, etc. other than the basics. CFPs are more equipped to build an overall wealth plan for you, and CFA charterholders have expertise in managing your investments (like you pointed out). It's truly a practitioner investment management designation. It is notoriously difficult to get, harder IMO than any other finance-related designation and also harder than an MBA or Masters in finance (because they will hand hold you through the program and you will graduate as long as you pay). I am biased for sure, but I think it's pretty well known if you ask around (even people with other designations).

The person you are dealing with at the bank is probably a business development/account rep/salesperson, who deals with clients, raises funds and markets product. The question is who is giving you advice on your portfolio? If it's this person, then absolutely they should have a CFA designation (or a combination of other designations + many years experience). Your friend saying that it's not important for that person to have investment proficiency may or may not be correct. If they're the one giving you investment advice and constructing your portfolio, then your friend is wrong.

This all depends though on what type of account it is? Are the securities pooled funds or a discretionary account with individual securities? Who is making the policy decisions on your asset allocation? Who is managing the actual securities? Are you directing them at all?

[theJuice]

Originally Posted by heep223

In short, having the CFA designation is very important in becoming a licensed portfolio manager. It's written right in the ASC's proficiency requirements to manage money.

However I was a bit confused by your post. The CFA designation is the "gold star" of the investment management world. That said, CFA charterholders don't have expertise in financial planning, estate planning, budgeting, life insurance, etc. other than the basics. CFPs are more equipped to build an overall wealth plan for you, and CFA charterholders have expertise in managing your investments (like you pointed out). It's truly a practitioner investment management designation. It is notoriously difficult to get, harder IMO than any other finance-related designation and also harder than an MBA or Masters in finance (because they will hand hold you through the program and you will graduate as long as you pay). I am biased for sure, but I think it's pretty well known if you ask around (even people with other designations).

The person you are dealing with at the bank is probably a business development/account rep/salesperson, who deals with clients, raises funds and markets product. The question is who is giving you advice on your portfolio? If it's this person, then absolutely they should have a CFA designation (or a combination of other designations + many years experience). Your friend saying that it's not important for that person to have investment proficiency may or may not be correct. If they're the one giving you investment advice and constructing your portfolio, then your friend is wrong.

This all depends though on what type of account it is? Are the securities pooled funds or a discretionary account with individual securities? Who is making the policy decisions on your asset allocation? Who is managing the actual securities? Are you directing them at all?

Thanks for the reply Heep.

Heh, no my friend has nothing to do with the investments at all. Know better than to mix friends and money. Moreso just somebody I was discussing the situation with is all. Just more of a "What do you think about this situation" type thing.

Ah, yea always thought that the CFA was very highly regarded title/designation. Thanks for breaking it down.

Actually, so when we first were thinking of doing the investing, we met with a number of people from some different banks. Obviously, I tried to do my homework, checking the credentials etc. In the end, as I mentioned previously, 99% of them had all MBA/CFA/CFP etc besides their names. So I had to choose it based more how comfortable I felt after meeting them in person, doing the best I can to make some kind of impression based on those brief meetings. They all introduce themselves, introduce me to the portfolio manager, their assistant, the private banker, the whole lineup and shake the hands deal. Take me up to the big board room with huge windows and do the big pitch. Each telling me how long they've been working in the industry, their education etc etc Basically do their best to make me feel like I'm a valuable client, which I must admit felt very nice.

I'm actually not sure what type of "account" it is. Initially I met up with the Portfolio Manager a few times and they asked me risk tolerance etc, and a few meetings later they came up with a plan, for example, 70% equities/30% bonds. Occasionally when I meet up with them once a year they may ask me if things have changed, lifestyle changes, and for example, they now may have slightly changed things up to maybe 65%/35%. They mail me a few times a year showing a more detailed breakdown of where things are allocated, like in that 70% equities for instance, maybe 30% of it is Canadian, 30% US, 40% International for example. I know for this account in particular, I pay around $30k a year in fees.

I was actually pretty happy with the relationship for the most part, as I'm not very familiar with investing/stocks (as you can tell), and for the most part, I enjoy not really having to worry too much about it. The recent issue and why I even made the post was that my previous Portfolio Manager just recently left, and now I got a call from the bank informing me someone new would be taking over my Portfolio, and I would be dealing with them going forward in the future. This person doesnt have a CFA when I look at their profile, though it does list Portfolio Manager under their title, and hence the initial question if I should have any concerns regarding that fact. They would be I assume "managing" my money in the future, or at least doing what the previous guy did, only without a CFA title. They did have a CFP though.

[Slava]

I think that there are other ways that you can be licensed as a PM. To manage money on a discretionary basis they could have the CIM designation or CFA. There is a process though for people to work as an assistant PM for a period of time and then eventually be licensed as a full PM, but truthfully I'm not all that familiar. My opinion is that the CFA is globally recognized as the gold standard, so I just knew for myself that was the route I would pursue.