[MoneyGal]

Oh dear. The Chum Bucket is a fictional restaurant owned by Sheldon Plankton, and located across the street from the much more successful Krusty Krab, owned by Eugene Krab. All on the Spongebob Squarepants show (I have two little kids, have I mentioned that? ) And...Spongebob lives in a pineapple under the sea!

Back to Sponge_1. You know, if you want to learn about investing, I recommend you take the courses from the Canadian Securities Institute. The only problem is that they are ridiculously expensive. The financial planning courses which lead to the CFP exam are also another interesting thought. There are many course providers and these, too, are also expensive.

But here's my rationale: which may not apply to Sponge, but could possibly apply to other posters. If you take the CSC or the CFP coursework, you might be out $1000 or even more. But amortized over your investing lifetime, that $1000 might actually be well-spent.

Anyways. I am writing quickly and over my lunch break, and this isn't my most thoughtful post. But I do sort of wonder whether taking the CSC courses might be of interest to other people here. (Disclaimer: I hold the CFP certification and I am a former investment advisor, formerly working on the IDA [now IIROC] platform; i.e., not mutual funds only.)

 

[FrugalTrader]

MoneyGal, that's an interesting thought. I did the CSC as more of a hobby project, but I'm wondering, how much more challenging is obtaining the CFP?

 

[MoneyGal]

I'd say the CFP = 5 CSCs. Why? Because the CSC has a much, much narrower focus. The CFP requires competency in wide range of financial planning topics, beyond investing and "know your client," and including estate planning, family law, tax planning, and risk management (i.e., insurance) topics.

Plus the CFP exam is related to as brutally hard. (And it is about to get harder: I'm on the item writing committee preparing questions for this year's candidates!)

Fewer than half the people who sit the exam pass it, and the pass rate goes down, not up, with subsequent tries. The November 2009 pass rate was the highest it's been in years, at 44.7% (ouch!). (First-time writers did better, at just over 50%, in November.)

IMO, it's a completely different thing passing two one-hour, multiple choice exams separated by time (the CSC exam) versus a six-hour, one-time, integrated exam, half of which is case studies (still multiple choice, though!).

 

[FrugalTrader]

Wow, thanks for the explanation. I had no idea that obtaining a CFP would be so challenging. What is the greatest value of obtaining the CFP? Greater industry recognition?

Any idea how obtaining a CFP compares to obtaining a CFA?

 

[MoneyGal]

We could start a whole separate thread on this.

From my POV, I am interested in financial planning *in addition to* investing - and the CSC is not a financial planning course of study or designation. You could almost think about the CSC as your "union card" for selling investment products.

I had my own reasons for obtaining the CFP. I am not now working as an advisor, but I still work in the field of personal finance. The CFP is *the* designation of choice for me - a CSC would be of no use to me in my current role...it is not a professional designation, it is a licensing requirement. So when I left the advisor world, I let my CSC licence expire.

As for the CFA: this is a quant designation. If you wanted to be a back-office staff member in an investment shop, you'd need this. For front-office (i.e., client-facing), you need the CSC (for your license). The CFP is the next designation in the stream for client-facing work.

If you wanted to do more quant (back-office) work, you could also do a Masters of Finance. It's a toss-up to me whether one is preferable to the other...you could think about the CFA as a "professional" (or "hands-on") designation and the Masters of Finance as an "academic" (more "hands-off") designation.

These are all generalizations and broadly speaking they apply to higher-end situations in which you are managing relatively serious piles of money. There are lots of people using the title "financial advisor" or "financial planner" who don't even have the CSC license, let alone the CFP or the CFA.

 

[Four Pillars]

Wow, thanks for the explanation. I had no idea that obtaining a CFP would be so challenging. What is the greatest value of obtaining the CFP? Greater industry recognition?

Any idea how obtaining a CFP compares to obtaining a CFA?

Not sure if I'm adding or subtracting from what MoneyGal has said but my take on the CFA and CFP is that the CFP is exactly what the title says - financial planning. Budgets, investments, taxes etc - all the personal finance kind of stuff. Best suited for a...financial planner type who meets with people and helps them work on their finances.

The CFA is far more hard-core investment oriented with lots of focus on investment theory (ie efficient market models etc), technical investment stuff like bond pricing, option pricing etc. It's better suited for someone who is exclusively doing some sort of serious investment work ie research analyst, portfolio manager etc.

I found the CFA to be very interesting (I passed level I and took level 2 but didn't write the exam for level II when my career changed). I haven't taken any of the CFP although I'm somewhat familiar with the material. I took the CSC.

I'm not really sure how useful either designation is unless you can apply it to your work. For an individual who just wants to improve their own knowledge I would suggest finding out the course material of a relevant course and just do the reading yourself.

 

[MoneyGal]

FP: you are adding.

I happen to work with derivatives and options now (at a theoretical level) and believe me, none of that was covered either in the CSC or the CFP except at the most basic level (i.e., one or two paragraphs on how puts and calls work, so you can memorize the definition and spit it out in an exam question. Mos def no requirement to calculate the value of a put option or to decompose a financially-engineered product to find the embedded puts and calls that make it work...)

 

[FrugalTrader]

Cleaner to have a separate thread discussing the issues of the differences between CSC, CFP and CFA.

 

[FrugalTrader]

FP, how was the first level of CFA? Was it a killer exam like the CFP?

 

[Spidey]

I've taken, and passed the CSC about 10 years ago (was considering a career change at the time). Even though I'm the kind of guy who is constantly reading about investing, I found the course to be extremely dry (possibly not appropriate for the casual investor).

 

[Four Pillars]

FP, how was the first level of CFA? Was it a killer exam like the CFP?

The CFA exams are very tough. There is a lot of material and there is only one long, long exam.

That said, the material itself isn't rocket science but if you don't have much of a background in finance then there is a lot of learning to do. It takes a huge amount of time and when I took it, the exam was only once a year so there was no flexibility in terms of schedule. I can't imagine doing it now.

I've never taken the CFP courses so I can't really comment on those.

 

[MoneyGal]

I see that the pass rates for the CFA exams are similar to the pass rates for the CFP exam. I don't know whether that means one can conclude they are "equally tough" or just that candidates in aggregate are equally unprepared for the rigour of the exam.

In theory, candidates for the CFP exam are prepared for the exam because in order to qualify, you must have passed an approved course of study with, presumably, its own exams.

I got a call when I was midway through my CFP course of study inviting me to something for their "top students." I was a little mystified that I was a "top student" because, although my grades were very decent, I wasn't pulling down 95% marks. "How can I be a top student?" I asked the guy on the other end of the phone. "It's because 75% of your peers [the people who started the course at the same time as I did] have already dropped out," he responded.

 

[FrugalTrader]

After the CFP, what is the next step to obtain the ability to "practice"?

 

[MoneyGal]

The CFP is not a practice designation.

If you want to sell investment products, you need a license - either the mutual-fund-specific license, the RESP license, or the all-in license. (And if you want to sell derivatives, you need a separate license for that, too.)

The CFP is a "professional" designation and is a requirement for some (usually banking) jobs, but it doesn't bring you any additional powers or capabilities that a sales license already provides. Make sense?

Now, if you want to provide investment *advice,* without providing specific buy-sell recommendations for particular products, you can do that without having a sales license. However, you still don't need the CFP for that.

 

[scomac]

I've never taken the CFP courses so I can't really comment on those.

I have and I hold a Financial Planning Certificate from our local community college. This is the prerequisite course for sitting for the CFP exam. Our instructor set many of the questions for the registration exam and as a result the various course materials were quite extensive over the whole host of topics that encompasses personal financial planning.

When I took the courses (over two years), most of my class mates were in the industry with only a couple of us outsiders. At the time, I had an inclination to get into the industry, but thought differently of that when it became rather obvious through conversations that the main role of advisor was to move product. As it stands, I don't regret for a minute taking these courses as they have provided me with valuable insight into a wide range of topics that affect personal finance. As it stands, the knowledge base is more useful, I believe, than a strictly investment based course.

I found the most challenging course in the series to be the course that dealt with case studies. These are tough when making recommendations based on limited input and I believe this is why the pass rate is so low. In many cases, it was extremely difficult to choose between different courses of action as more than one was often applicable and appropriate. You really had to see the case for the merits that the test setter did.

At the time that I took the courses, the tuition totalled ~$1400 for the four courses; expensive, but worth it as I know I have earned at least that much back. The most recent course catalogue from the college I attended has the courses currently priced in >$2200, so that's a very big jump in just three years. I question whether I would do it again just for personal interest.

 

[MoneyGal]

Oh yeah. And if you want to sell (life) insurance products, including seg funds and GMWBs, you need an insurance license, which is a totally separate and distinct thing from a mutual funds/RESPs/stocks and bonds license.

 

[lonelimey]

I found the CSC course very usefull especially in learning more about the bond markets. Sat the two hour exams in Dec 09 and Jan 10 and passed each first time. The cost was fairly reasonable at $880. Hope to get into the broking side of a financial company.

 

[Robillard]

The CFA program is not too expensive if you register early. I think the cost for each level is about $700-$800 depending upon the exchange rate, plus a one-time program fee for new registrants. I wouldn't advise signing up if one wants a general finance education, though I think it provides much better value an the CSC. The amount of material for the CFA program is massive, but the depth of topic coverage is good. The economics coverage is not very deep, since it is tailored to finance professionals, but it provides good coverage of financial accounting and reporting, portfolio theory, and the valuation of bonds and stock.

I passed the level II exam last year and I'm currently working level III.

I'm just throwing this out there, but one option for gaining knowledge of finance would be to "audit" (I think this is the right term) some finance classes at a local university or college. By "audit", I mean take the class without writing the exam and receiving no credit. My university (Simon Fraser University) let people "audit" classes for a lower fee than it normally cost to register in a course for credit. Also, my university offered many business classes in the evening, which can be more convenient for one's schedule.

 

[andrewf]

I'm happy that this thread was started as it gives me an appropriate place to ask a question I've been mulling for a while. I'm considering whether it would be plausible to do financial planning as a part-time business. The reason why I'd want it to be part-time is that it would enable me to help people without needing to do it with an eye on paying my bills. I could keep fees low and proportional to results generated (and not just AUM or products sold) without worrying about putting food on my table.

MG, do you think this is unrealistic? If not, what course of action would you take in gaining relevant qualifications? I've a pretty strong grasp of finance already (took several corporate finance courses during my undergrad), so I don't find the idea of gaining designations intimidating.

 

[Four Pillars]

Now, if you want to provide investment *advice,* without providing specific buy-sell recommendations for particular products, you can do that without having a sales license. However, you still don't need the CFP for that.

So if I wanted to "open up shop" in retirement and offer financial services for people off the street - help with budgeting, investing (ie asset allocation). I don't need any kind of license for that?