Level III.....

Level III seems to be a really good level for financial advisors. They deal with clients all the time and have first hand experience witnessing cognitive and emotional biases not to mention the need to write out IPS for each client. I guess most of the CFA charterholder are in private welath management which is similar to if not same as a financial advisor. Am I right?

You are correct that L3 is the most applicable to PWM/Financial Advisors. Still, only about 4% of CFA charterholders are financial advisors. Very few of the FAs that I have worked with are charterholders. It doesn’t really carry any weight with 99% of all retail clients. The CFP is a much more common designation among PWM/FAs. Most of the FAs that I have seen with the charter specialize in institutional consulting.

The CFA is much more valuable for those who are in analytical positions. CFAI publishes stats that give a breakdown of career-type for all charterholders (link below).


thanks McLeod81. According to CFAI, 22% of the charterholders are portfolio managers. When they say PM, are they talking about mutual fund managers? Are wealth managers or IARs not included in the portfolio manager?"

I think PM in their statistics is referring to a manager of a publicly available investment strategy (mutual fund, SMA, closed-end fund, hedge fund, etc). I don’t think a wealth manager would fall under that category, since they are managing individual portfolios for a bunch of clients.

thanks for the help

There are also different tiers of “financial advisors.” It goes all the way from Edward Jones to managing Zuckerberg and sovereign wealth money. For example, in private banking arms of major banks I know that the CFA is respected for the investment specialists. Obviously it is not necessary for the underwriting/aircraft finance/xyz people and is less necessary, but still a plus, for the bankers themselves who own the client relationship.

It just depends on how the person labeled their job on the CFA career profile page. I know many Merrill advisors that call themselves portfolio managers…incorrectly IMO.

awww yes, these are the ones that confused me. So, some of the advisors call themselves PM eh? The merrill advisor I know has “wealth manager” on his business card so he calls himself a PM. So, a edward advisor can call himself a PM as well…since they actually do manage some client accounts in separate wrap accounts.

I doubt you can rely on broadly named categories in finance to give you much insight. Lots of brokers call themselvse PMs. Lots of execution traders call themselves “traders,” which, while technically correct, is a lot different from a prop trader or hedge fund trader. There are also a million and one types of “analysts” out there. Generally, titles don’t mean that much.

thanks for the clarifiaction. “It’s what you do that is important not what you say you are” is my conclusion.

Most larger broker-dealers - all the wirehouses and most independents - and all RIAs have what’s called a “Rep as PM” platform. The advisor is a true money manager with full discretion over client portfolios. Generally it’s only available to the senior reps that meet some qualifications. Those are the guys that call themselves portfolio managers.

I still don’t agree with the usage, but understand why they believe they deserve the title.

Yea I used to work at a large broker dealer and our business card read financial advisor although we were just selling products and managing some clients money. Some of the senior guys who were IARs call themselves PM. I thought that was strange but then it kind of made sense.