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 insurance mutual funds
or stocks and bonds the licensing
process differs depending on the
products that the advisor is able to
give advice on some licenses are easier
to obtain than others and it's not
always easy to tell who is licensed to
sell what I'm Ben Felix associate
portfolio manager at PWL capital in this
episode of common sense investing I'm
going to tell you what to look for when
you need financial advice
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many so-called financial advisors are
only licensed to sell insurance products
for the unwitting investor this is not
always immediately obvious an insurance
agent is usually able to sell life and
health insurance segregated funds and
annuities some of these products can be
sold as investments but they come with
hefty fees and will often result in
penalties if you want your money back an
insurance agent gets paid when you buy
an insurance product so they're
motivated to sell insurance products
getting an insurance license requires
completing a training course passing one
closed book exam and obtaining
sponsorship from an insurance company
there is nothing wrong with being
licensed to sell insurance but when you
are seeking financial advice you might
want to know that your advisor has more
qualifications than a license to sell
you insurance another common license
that a so-called financial adviser might
have is a license to sell mutual funds
similar to an insurance license a mutual
funds license limits the advisors
toolbox mutual funds can be great in
some cases but the vast majority of the
mutual funds sold in Canada have high
fees and on average returns the trail
the market obtaining in mutual funds
license involves one closed book exam
and a period of supervised Dec tivity
the licensing process for mutual fund
salespeople is fine but it is important
to understand that the license is for
selling mutual funds and that's it if
you are seeking out financial advice a
license to sell mutual funds may not be
a sufficient qualification the most
challenging form of financial licensing
to obtain is the securities license this
license permits giving advice on mutual
funds stocks bonds and ETFs obtaining
this license requires passing three
exams undergoing a period of supervised
training and completing a 30 month
proficiency course on wealth management
this is a little bit more robust but it
is still just a license to sell
securities someone who is licensed to
sell securities can take their
registration a level higher by becoming
a portfolio manager
unlike financial adviser portfolio
manager is a regulated title it can't be
used by just anyone a portfolio manager
has to meet a five-year experience
requirement and have earned either the
chartered investment manager or
chartered financial analyst designation
both of these designations require
hundreds of hours of study in order to
pass
multiple exams between the experience
and education requirements the portfolio
manager is actually in a position to
offer financial advice rather than just
sell products they are also legally
required to act in the best interest of
their clients which is not the case for
the other licensing categories that I've
mentioned separate from a license to
sell or recommend any type of product a
certified financial planner is someone
who's passed multiple exams and met a
professional experience requirement many
certified financial planners may also be
licensed to sell some type of financial
products but it is not a requirement of
the designation so what does it take to
be a financial adviser technically
nothing but if you are a person seeking
financial advice it's a good idea to
look for a portfolio manager or someone
who's earned the chartered investment
manager chartered financial analyst or
certified financial planner designation
join me in my next video where I will
tell you how a financial adviser might
decide how to invest your money my name
is Ben Felix of pwl capital and this is
common sense investing I'll be talking
about this and many other common sense
investing topics in this series so
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I'd also love to hear from you as to
what topics you'd like me to cover
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you