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Wading through the qualifications alphabet soup

Now the Institute of Financial Planning has been merged into the Chartered Institute for Securities and Investment, most financial planners are getting used to the new norm. The CISI is a very different beast to the good old IFP. Not necessarily better or worse, just different. And that takes some getting used to.

One issue that has been causing a bit of unease since the merger is certifications. Certified Financial Planners can now add the title Chartered Wealth Manager to their alphabet soup of designations simply by undertaking the ‘Integrity Matters’ ethics exam and paying an admin fee of £30 plus VAT.

As someone who flunked the CWM exam a few years ago, I am not complaining. But the issue  some commentators have raised is that the CFP is a QCF Level 6 qualification, while the CWM is Level 7.

So are the two really comparable? Much like the organisations that created them, CFP and CWM are different beasts. Again, one is not necessarily better than the other – they are just different.

The CFP is assessed by way of a case study, after passing an exam that tests knowledge of investment, protection, pensions, tax and general financial planning. Candidates are expected to prepare a financial plan, designed to test the application of their knowledge in these key domains, and demonstrate how they might present the plan to a client in a way that is meaningful.

The CWM, on the other hand, is assessed by three exams, covering financial markets, portfolio construction and applied wealth management. Put simply, the CFP is broader as it covers key areas of personal finance, while the CWM focuses on investments alone, albeit requiring a deeper knowledge of financial markets and portfolio construction.

This begs the question: what is wealth management in the true sense of the term? Is it the narrow focus on investment management or does it require a much broader range of skills in order to manage not only a client’s investment portfolio but their retirement, tax and estate planning as well?

Portfolio managers have hijacked the title ‘wealth manager’ for far too long. In reality, people’s wealth extends beyond their investment portfolios and, as such, effective wealth management requires expertise in other domains not covered by the current CWM exams.

However, one might argue that investment content in the CFP model could be more in-depth, and CFP holders should have to undertake an exam on portfolio construction before being able to use the CWM designation.

On this point, though, it is important to bear in mind many CFP holders would have already completed hundreds of CPD hours on investment markets and portfolio construction, and many will also hold other designations, such as the Investment Management Certificate.

What the CISI merger has done is create two different routes to gaining the CWM designation:  one with a narrow but deeper focus on investment and the other with a wider coverage of key areas including pensions and tax planning.

I guess it is up to clients to choose what they prefer.

Abraham Okusanya is founder and director of Finalytiq

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Unfortunately, the industry while trying to simplify matters has just made it too confusing… Why can’t we just have exams based upon each product area, protection (Protection Adviser), investments (Investment Adviser) & pensions (Retirement Adviser), and call them exactly what they are, if all qualifications are obtained, (Qualified Financial Adviser). Then apply the extra tier calling them advanced in each of the key areas, I think you get the picture leading up to (Advanced Financial Adviser). Product knowledge is very good, but it doesn’t make you an holistic financial planner, or show that you know your client, so the art of fact-finding, risk profiling, know your client, with a case study to then show that you can apply your knowledge to your clients specific circumstances would then be appropriate, (Chartered Financial Planner).

    The industry quite often knows best, but we have bodies and outside interference from those that have ill thought through ideas, that often for the industry simply does not work. Government for example, do they really want a nation of savers? No not really, they like individuals to obtain debt and spend money as much as they can as that generates jobs and profit while in power. No real Party or Government in my lifetime has ever really planned ahead further than the next election.

    Can we not just apply KISS guys…

  2. Amazing. This chap sets himself up as a consultant andsays it is up to clnts to chose wht they prefer

  3. Continued:
    So when was the last time this bloke went anywhere near a client?
    Inall mmy 30 years not one clent ever mentioned, let alone asked about my qualifications. And I spent all of those years going through the whole menue, from LIA ALIA & FLIA, to AFPC (becming a settee) to CFP with MAQ and pensions papers inbetween.
    Abraham old chap, clients don’t give a toss. Exams are for one’s own benefit to ensure approriate levels of expertese, to satisfy the regulator and for many a CV polisher if they are employed.

  4. This is a good article: the truth is that CISI has always been generous and inconsistent with its designations.

    What has recently been termed their “Chartered Wealth Manager” qualification was previously their ‘Masters in Wealth Management’ whilst the CWM designation was handed out to anyone with rather fewer exam passes. For example, at one time, you could bag both ‘member designation’ and the CWM paper just by passing the Private Client Investment Advice & Management paper (‘PCIAM’). [OK – The level 6 PCIAM paper wasn’t a walk in the Park – in fact quite a nice refresher for Chartered and Certified Financial Planners! – but it was just one exam all the same].

    At one point, you’d get ‘Member’ designation by completing the CISI Diploma (or SII Diploma as it was): 3 nice hard level 6 and above papers. Then they started giving it to those passing qualifications like the ‘Diploma in Compliance Operations’ – one hard paper on Regulation & Compliance and a couple of light-weight level 3 multiguess papers. Then they moved to giving ti out with just one exam pass – the PCIAM paper…

    There are various other membership designations within CISI (Member, Fellow) and then with another Charted Designation that can be added on top (‘Chartered FCSI’). The link to actual qualifications is tenuous at best.

    Sadly, this is why you always have to look past the CISI designations and ask what actual exams have been studied and passed.

    The real qualifications that they’ve offered in the past are: CISI Diploma and the ‘Masters in Wealth Management’/Chartered Wealth Manager Qualification. The designations are pretty worthless.

    Traditionally those from the private client stockbroking may have looked down on financial advisers with their perceived ‘life assurance’ heritage. But the truth is that these days many discretionary / wealth managers have much to learn from good financial advisers / planners – whether its the formal planning methodology Abraham refers to, or just doing some form of ‘fact-find’ as a starter. A rigorous and relatively consistent exam framework in CISI would also be nice.

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