Do Consumers Want An Advisor Who Is A Person Of Letters?

By Cyril Tuohy

InsuranceNewsNet

If you’ve ever wondered why some advisors' business cards have so many three- or four-letter credentials listed after their names, it’s because certification matters.

Now, it could be argued that some financial professionals with five or six professional designations take their professional lives a little too seriously, or that for all their intellectual brainpower they remain uncharacteristically insecure.

But certifications do matter.

When consumers are evaluating financial advisors, they look at what the advisor knows, the type of advice they provide and their years of training, according to a new survey by the Certified Financial Planner Board of Standards, Inc.

The CFP Board, which issues the Certified Financial Planner designation, said the survey of 850 U.S. investors who were at least 18 years old with investable assets of $100,000 or more, found that nearly 90 percent of respondents saw an advisor's certifications as important.

The survey also found that 86 percent of respondents preferred working with an advisor who had passed a certification exam, and 82 percent said it was important for a prospective advisor to discuss his or her training.

“Consumers want financial advisors to understand and offer guidance on all their financial needs,” said CFP Board CEO Kevin R. Keller.

Unlike a writer, say, who’s name, articles and books easily turn up in a Google search, or a sculptor whose works of art are visible on public display, or the building contractor who posts a sign on a front lawn indicating who is responsible for the renovations, the successes of financial advisors usually aren’t public.

It’s only when the next door neighbor shows up at the Christmas party in the late-model Porsche that you wonder whether she has had a good year — and venture to ask for the name of her financial advisor.

The survey found that 81 percent of the respondents would prefer to work with an advisor who is qualified to review all areas of their financial life, and only 19 percent said they preferred an advisor who was a specialist in one or two areas.

But is it possible to run into financial professionals with too many letters?

The CFP Board thinks so, saying such designations often indicate expertise in advice narrowly focused on investments, securities or insurance.

What consumers really need is “holistic advice that takes into account the impact of that advice across a broad range of financial subjects” provided under the highest standards of care, the CFP Board said.

The CFP Board, along with the Financial Planning Association and the National Association of Personal Financial Advisors, called on implementing “common sense regulatory standards” for financial planners.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].