Investors want advisers with complete view of finances

CFP Board survey finds credentials are important when choosing an adviser

By Mark Schoeff Jr.

Aug 20, 2013 @ 2:53 pm (Updated 4:40 pm) EST

finances, advisers, credentials, certification, cfp, cima, imca, cfpb

A vast majority of Americans want their investment advisers to manage their wealth comprehensively and to possess designations demonstrating competence, according to a new survey.

The study, conducted on behalf of the Certified Financial Planner Board of Standards Inc., found that 84% of those polled said certifications are important when choosing an adviser. In addition, 91% “expect the advice they receive from a financial adviser to take into account their total financial situation.”

Nearly half of consumers — 48% — ranked “strong knowledge of financial planning" as the most important attribute in an adviser, followed by ethics (20%), years of experience (17%) and the ability to offer a range of financial products (11%).

About 68% of respondents said that the most important advice certification is one that “demonstrates knowledge of multiple financial areas,” such as investments, taxes and insurance. When asked whether they would feel more confident working with an adviser who has a financial planning designation, 87% answered “yes.”

The online survey of 1,012 adults conducted Aug. 8-11, shows plenty of room for growth in the investment advice sector, with 59% of those surveyed saying that they've never worked with an adviser. Most of the respondents, 70%, had less than $100,000 in investible assets.

The CFP Board is using the survey to augment its effort to elevate the name identification of the CFP mark that it grants. The organization administers the exam, education and ethical requirement related to the designation, which is held by about 68,000 investment advisers in the U.S.

“As Americans' finances become more and more complex, they are turning to advisers who can partner with them, look at their total financial picture, put all the pieces together and provide a comprehensive financial plan,” CFP Board chief executive Kevin Keller said in a statement. “As this survey shows, Americans want advisers who are competent in financial planning and have a designation to prove it.”

The CFP Board is trying to make the CFP mark stand out among the approximately 150 investment-adviser designations.

The certified investment management analyst and the chartered financial analyst are two other prominent designations.

The recent CFA Institute & Edelman Investor Trust Study showed that investors rank integrity over performance as the reason that they have faith in their advisers.

“The designation is what gets people interested in an adviser, and then it's the trust and ethics that keep them with that particular adviser,” said Robert Stammers, director of investor education at the CFA Institute. “The rigor of the CFA designation and the ethics component is something investors appreciate and look for when doing due diligences on their investment adviser.”

A survey of 750 advisers conducted earlier this year by the Aite Group LLC found that those who had earned the CIMA mark achieved higher productivity, managed a higher percentage of client assets and had higher career satisfaction.

Of the 1,200 people who have applied to start the CIMA certification process in the current fiscal year, about 37% came from independent investment adviser firms or independent broker-dealers, according to Sean Walters, chief executive of the Investment Management Consultants Association.

“We've seen our applications broaden,” Mr. Walters said. “Independent advisers are starting to get that they need a CIMA on their team.”

Both the CFP Board and IMCA want to increase the reach of their designations. But they share a core goal — increasing investor confidence in investment advisers.

“Our role is to make sure the letters after a person's name mean something,” Mr. Walters said.