What exactly is an advisor? Is an advisor a professional, like a doctor, lawyer or accountant? Or is an advisor a salesperson, like a real estate agent?

The financial services industry’s governing bodies are trying to move advisors toward the former and away from the latter. Based on the data compiled on designations and education for this year’s Advisors’ Report Card, the process is a slow one, and industry efforts are uneven.

“Across the board, I don’t think there’s a sector that isn’t trying to raise the bar,” says Jay Flye, vice president of sales at CSI Global Education Inc. , formerly the Canadian Securities Institute, in Toronto. Flye sees the professionalization of the financial services industry as the “regular evolution of the marketplace” as the work becomes “more complex.”

Taylor Train, chief operating officer of the CLU Institute and vice president of Advocis, agrees. The consumer is more sophisticated, as is the planning he or she requires. “Boomers aren’t babies anymore,” says Train.

Boomers expect service, knowledge and accountability — which legitimate designations help the advisor provide.

But what is a legitimate designation? Train and Flye agree: it should have college-level content, a consistent curriculum that includes the core competencies and proficiencies, standards and ethics, and regular assessments. A designation doesn’t end with the exam, either. Continuing education requirements and a governing body are key to the added value of a designated advisor.

The certified financial planner designation, which Advocis awards under the auspices of the Financial Planners Standards Council, and the professional financial planner designation, awarded by the Institute of Canadian Bankers, which was acquired by CSI this past year, are the most prevalent designations across the industry.

Of advisors in their 30s and 40s, 60% have one or more designations, making them the most designated age group. The percentage of advisors with designations declines for advisors in their 50s and 60s, at 57% and 54%, respectively. But at that point in their careers advisors are thinking less about building their knowledge base and more about building their succession plan.

Whether entry-level advisors are not interested in designations or simply overwhelmed with other tasks, advisors under the age of 30 have the fewest designations. Only 26% have industry acronyms to add to their business cards.

The professionalism that comes with those acronyms provides a return on investment for advisors who seek them. While CFPs are distributed evenly across the annual compensation categories, niche-oriented designations tend to translate into better business. Three times as many registered health underwriters, twice as many chartered life underwriters, three times as many fellows of the CSI and more than 10 times as many chartered accountants have annual compensation of more than $1 million.

“The CLU and the RHU are not just for insurance,” says Train, who notes they equip an advisor in any field to deal with the complexities of financial planning — the CLU particularly for estate planning and the RHU for living benefits.

Different channels within the financial services industry have embraced designations to different degrees. The banks and credit unions have led the way by making designations the educational baseline for account managers. Of the account managers surveyed, 72% have at least one designation, whereas almost 60% of brokers and 55% of planners have at least one designation. Insurance advi-sors show the most resistance to the trend, with only 38% holding a designation.

Of the 1,727 advisors Investment Executive surveyed, barely half — only 56% — had any designations. Train recognizes that the financial services industry is “a few kilometres away” from where it needs to be.

Will planners, brokers and insurance agents follow the lead of account managers? It is hard to say. There is an institutional imperative for the banks to embrace designations. A prospective investor who walks into a branch of a major bank should get the same advice whether that branch is in Calgary, North Bay, Ont., or Corner Brook, Nfld., say bank executives. Consistency in education can help assure that uniformity of service.

Outside of the banking industry, corporate leadership has yet to reach a consensus as to what approach to take to make advisors professionals. Investment dealers are focused on training new advi-sors, but the trend is toward placing new hires with seasoned advisors in a mentoring situation rather than course work and examinations. As a result, while young brokers get lots of help, older advisors feel abandoned.

@page_break@And both mutual fund dealers and investment houses are happy to hire trained account managers away from banks and successful advisors from other dealerships, selecting for volume and book size. Insurance companies want new hires for their dedicated sales forces to be working on designations, but the onus remains on the advisor to complete them and compensation is tied to sales, not education. This makes it hard for advisors to shake the salesperson image.

Train expects “leadership to step up to the plate” — because if they do not, regulators will set the mandate, he says: “Either the industry sets the standard, or the standard will be set for it.”

Advocis is doing its part to promote professionalization by requiring that its members maintain a designation and by keeping the CLU and the RHU, which was recently relaunched with more Canadian content, among other features.

It looks increasingly like a grassroots movement. The advisor is on board. Even if designations are not necessary for an advisor starting out, Flye says, they are a prerequisite for career advancement and leadership.

Independent advisors benefit the most from the depth and breadth of the training they acquire from designations. Advisors living off commissions count on their credentials to give weight to the counsel they provide and to win trust with clients, Train maintains, overcoming the transactional nature of the business.

Having a designation is also in the advisor’s interest. Boomers may not know the difference between a PFP and personal financial planning course, but that doesn’t make them any less demanding when it comes to the competency of the person they entrust with their savings. Designations allow an advisor to build his or her strengths and also understand his or her own liabilities and weaknesses.

“Boomers sue,” Train says. IE