What Does It Take To Become a Financial Advisor | Common Sense Investing with Ben Felix | Summary and Q&A

TL;DR

Financial advisor is not a regulated title and anyone can use it. Look for advisors with additional qualifications such as being a portfolio manager or having designations like Chartered Investment Manager, Chartered Financial Analyst, or Certified Financial Planner.

Key Insights

• 😒 "Financial Advisor" is not a regulated title, allowing anyone to use it without specific qualifications.
• 🥅 Many advisors are only licensed to sell insurance products, which may not align with your financial goals.
• ❓ Advisors with a mutual funds license have limitations and may not provide comprehensive financial advice.
• 👻 Obtaining a securities license allows advisors to give advice on a broader range of financial products.
• ❓ Portfolio managers have stricter requirements, including experience and specific designations.
• 🧭 Certified Financial Planners have passed exams and met professional experience requirements.
• ❓ Consider seeking advice from advisors with additional qualifications to ensure comprehensive financial guidance.

Transcript

Have you ever wondered what qualifies someone to use the title Financial Advisor? The short answer is nothing - financial advisor is not a regulated title. Anyone is free to use it. Most of the people that do use the financial advisor title are licensed by a provincial regulator to sell certain financial products. They might be licensed to sell ins... Read More

Questions & Answers

Q: Why is the title "Financial Advisor" not regulated?

The title is not regulated because there are no specific requirements or qualifications needed to use it. This means that anyone can call themselves a financial advisor, regardless of their knowledge or expertise.

Q: What are the limitations of advisors who are only licensed to sell insurance products?

Insurance agents can sell insurance-based investment products, but these typically come with high fees and penalties for early withdrawals. Their motivation is to sell insurance products, not provide comprehensive financial advice.

Q: Are mutual funds a suitable investment option?

While some mutual funds can be beneficial, the majority in Canada have high fees and lower returns compared to the market. A license to sell mutual funds only qualifies an advisor to sell these products, and it may not indicate their ability to provide comprehensive financial advice.

Q: What qualifications should I look for in a financial advisor?

Look for advisors who hold titles such as portfolio manager or have earned designations like Chartered Investment Manager, Chartered Financial Analyst, or Certified Financial Planner. These demonstrate a higher level of expertise and a commitment to ongoing education.

Summary & Key Takeaways

• The title of "Financial Advisor" is not regulated, allowing anyone to use it.

• Many financial advisors are only licensed to sell insurance products, which may not always be disclosed.

• Some advisors have licenses to sell mutual funds, but this may not be a sufficient qualification for comprehensive financial advice.

• The most robust qualifications for financial advice include licenses to sell securities, becoming a portfolio manager, or obtaining the Certified Financial Planner designation.