Your cheat sheet for deciphering financial industry professionals’ jobs & expertise
Remember Pretty Woman, when Richard Gere (Edward) explained to Julia Roberts (Vivian) what his job was? It wasn't just Vivian who was stumped. For millions of movie-goers, this was the first insight they had into the mysterious and sophisticated world of high finance...Edward was their introduction to ‘corporate raiders’ and private equity investing.
You don’t have to hang out in the streets of Los Angeles and wait for a Lotus Esprit to pull over to find someone whose job title you don’t understand. From the moment you step into a financial institution, you are bombarded with business cards: financial planners, investment advisors, portfolio managers, trust officers and the list goes on. You may be introduced to a whole team of professionals, each with their own complex-sounding area of specialization.
If you’re like most clients, you will probably nod your head and go along with the parts you don’t understand, blaming yourself for not knowing the difference between the various roles and titles. You may be too shy or embarrassed to ask the quintessential question: what do you do?
As a general rule of thumb: never be afraid to ask for more explanation when your money is involved. However, to help you feel a little more confident, here is a cheat sheet to help you decode some of the titles you may run into...
• Account Manager or Personal Banker (AM, PFR, PBO)– Often your first point of contact for your personal finances and basic investments. Handles credit card applications, personal loans, mortgages and other financial institution products. May be licensed to sell mutual funds and insurance products and can assist you with opening accounts, including registered accounts (such as RRSP or TFSA accounts). Sometimes known as Financial Advisors, Personal Banking Officers or Personal Financial Representatives.
• Private Banker – A central point of contact for wealthy individuals or families, who helps navigate financial transactions and works closely with other professionals on behalf of the client, such as the client’s accountant, lawyer and investment advisor.
• Trust & Estate Officer – Specializes in establishing trust accounts and estate plans. The trust and estate professional ensures that your accounts are established and maintained within local regulations and laws, often in several international jurisdictions. Acts on client’s behalf with a fiduciary responsibility, much like a lawyer-client relationship.
• Investment Advisor (IA)– Licensed provincial regulators to buy and sell securities on behalf of clients, according to the clients’ investment objectives for their portfolios. The IA must have client authorization on every trade and can trade securities within registered or non-registered accounts. In the old days, investment advisors were known as “stockbrokers”, but the job’s emphasis has shifted from merely executing the transaction of buying and selling of stocks, to today’s role of creating entire portfolio strategies, monitoring asset and risk weightings, measuring performance and providing regular reporting.
• Investment Manager (IM, CIM) – Licensed to trade securities within a client’s portfolio on a discretionary basis. In other words, once you’ve signed off on the plan, they don’t need to bother you with the details of every buy and sell; the IM makes the day-to-day decisions for you and keeps you up to speed on overall performance. Those with the Chartered Investment Manager designation may be identified as “CIM”.
• Financial Planner (CFP, PFP) – Someone who provides ‘big picture’ planning and a holistic approach to your overall personal financial situation. Will provide counsel on your investment strategy, tax situation, life insurance, retirement and estate planning, debt management and household budgeting. Professionals will have either the “Personal Financial Planner” (PFP) designation or the “Certified Financial Planner” (CFP) designation. Sometimes known as a “Wealth Management Advisor”.
• Portfolio Manager (PM) – Manages the investment strategy and makes buying and selling decisions for securities held within a mutual fund, pension fund or exchange-traded fund. Like an Investment Manager (above) but not just for you individually; the PM manages the investments within a fund held a whole group of clients or unitholders.
• Investment Banker – Handles the finances for the banking needs of corporations – known as “corporate finance.” For example, say a company needs a loan, wants to buy something big or make an investment in another company. The “i-banker” will help the company come up with money selling corporate bonds or issuing shares to the public in an IPO. They also facilitate the price and payout when one company acquires or merges with another.
Perfectly appropriate
Just to make it more confusing, keep in mind that many financial professionals are trained and licensed in more than one area...for example, an Investment Advisor could also hold a Financial Planning designation. This is why it is perfectly acceptable and perfectly necessary for you to speak up. Ask about credentials, designations and more importantly, ask what exactly it is that they do...and (as pertinent) don’t do.