Investors want advisers with complete view of finances

CFP Board survey finds credentials are important when choosing an adviser

Aug 20, 2013 @ 2:53 pm

By Mark Schoeff Jr.

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.

0
Comments

What do you think?

View comments

Recommended for you

Upcoming Event

Apr 30

Conference

Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video

Events

FlexShares' Nimeri: Why is interest in ESG investing surging?

Sustainable and socially responsible have been familiar, but forgotten, investment sectors over the past 40 years. Why is that changing? Abdur Nimeri of FlexShares offers his perspective.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Brace for steepest rate hikes since 2006 in new year

Citigroup, JPMorgan Chase predict average interest rates across advanced economies will climb to at least 1 percent in 2018.

Why private equity wants a piece of the RIA market

Several factors, including consolidation in the independent advice industry and PE's own growing mountain of cash, are fueling the zeal to invest.

Finra bars former UBS rep for private securities transactions

Regulator says Kenneth Tyrrell engaged in undisclosed trades worth $13 million.

Stripped of fat commissions, nontraded REIT sales tank

The "income, diversify and interest rate" pitch was never the main draw for brokers.

Morgan Stanley fires former Congressman Harold Ford for misconduct

Allegations against the wirehouse's former managing director include sexual harassment, which Ford denies.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print