Trainee investment managers who are starting out in the industry face the dilemma of whether to study for the Chartered Financial Analyst (CFA) or the Chartered Wealth Manager qualification.
While the CFA has long been held in high esteem among the investment management community, the newer Chartered Wealth Manager qualification awarded by the Chartered Institute for Securities & Investment (CISI) is becoming increasingly highly prized by employers.
The fact that new entrants to the industry are now routinely having to choose between the two underscores how much professional standards have improved since the retail distribution review (RDR) came into force in January 2013.
Today, consensus is that the benchmark across the wealth management industry sits at Regulated Qualifications Framework (RQF) level six – well above the level four minimum introduced with the RDR.
Level six is the equivalent of a Bachelor’s degree, while level four equates to the first year of a degree. The CFA and Chartered Wealth Manager designations both equate to level seven.
So, how can trainees decide between prioritising the CFA or chartered status?
Frank Dolan (pictured below), who chairs the CISI’s Wealth Management Professional Forum, believes the Chartered Wealth Manager qualification, which was originally introduced in 2008 as the Master’s in Wealth Management, will continue to gain traction in the future.
In his view, the CFA is more technical and analytical in comparison to the Chartered Wealth Manager designation, which means that it may be more suited to those in what he describes as ‘back-room operations’ rather than client-facing wealth manager roles.
‘My own decision to follow the Chartered Wealth Manager route was based on that analysis,’ Dolan added.
This demarcation between the two qualifications appears to be becoming entrenched at many of the major wealth managers.
Charles Stanley currently favours the CISI’s qualifications for trainees who plan to go into client-facing investment management roles.
Newcomers start by taking the CISI’s level four Investment Advice Diploma and then move on to the Chartered Wealth Manager qualification.
‘We allow about 36 months in total to do both qualifications. We see qualifications as the first level, as it is really about whether the person has the skills to do the job as well,’ explained Rebecca Griffith, a learning and development manager at Charles Stanley.
‘Once they have done the qualifications, we sign them off with our training and competence policy as stage one and then we allow them another six months in the role where they are focusing on the skills to provide investment advice to clients,’ she added.
Trainees who work in Charles Stanley’s asset management or research teams take a different path: they start with the level four Investment Management Certificate (IMC), followed by the CFA.
Across Charles Stanley’s front office staff, it is estimated that 2% currently have CFA Charterholder status, compared with 16% with the Chartered Wealth Manager designation.
The majority of staff – 65% – have gained the CISI’s Private Client Investment Advice & Management (PCIAM) qualification, which is level six. Meanwhile, the remainder hold qualifications from the Chartered Insurance Institute (CII) or other legacy qualifications.
At EQ Investors, investment managers are expected to first obtain the IMC, and after this, they can choose between two potential paths.
Then, similarly, those who would like to become client-facing will study towards the Chartered Wealth Manager qualification. Meanwhile, those who wish to pursue research-focused roles study for the CFA.
‘The CFA and Chartered Wealth Manager are seen as the benchmark qualifications. As with most industries, it is also important to supplement these qualifications by developing complementary skills and work experiences,’ EQ Investors’ spokesman, Ben Faulkner, said.
What lies ahead?
Comparing the numbers of newly qualified Chartered Wealth Managers and CFA Charterholders is not possible on a like-for-like basis. In 2018, 75 people attained the chartered designation.
By comparison, 11,380 people sat one of the three CFA exams in June 2018, although the CFA Institute does not stri pout pass rates per country and it is also not possible to strip out the number of wealth managers. The list includes those working at asset managers, banks, hedge funds and consultancies, among other firms.
Last year, 200 individuals passed the PCIAM.
Data derived from Wealth Manager’s Top 30 Under 30 in 2019 shows the continued popularity of the CFA.
Of the Top 30, 21 were CFA Charterholders – up from 13 last year. Meanwhile, the number of finalists with the Chartered Wealth Manager designation stood at 12, up from 11 last year, providing a snapshot of the path some young wealth managers are taking.
The qualification landscape remains fluid, though, and Charles Stanley is starting to consider the benefits of putting trainees through dual qualifications, covering both investment management and financial planning.
‘This is something we are considering, so that people can cover both bases with clients. It is all about how we can meet clients’ needs, and that may mean that people are dual qualified,’ she added.