Investors see financial advisors with different certifications after their name and wonder what they mean. Certifications are important because they show that advisors want to grow in their knowledge to better serve their clients; stay on top of industry rules and regulation; understand investment products and strategies; and log continuing education hours to keep their skills/understanding current. I would like to share with you some thoughts and statistics regarding certifications.
An Absolute Engagement, HNW Investor Insights Study in 2017 produced the following statistics regarding retirement and their financial advisor:
61% of investors say it is very important for their advisor to help them set clear goals for retirement.
72% of investors agree it is very important for their advisor to help them maximize income for retirement.
86% of clients agree that their advisor needs to meet a rigorous set of requirements to be certified.
Here are some of the certifications you may have seen or you might be familiar with:
CPA® - Certified Public Accountant CFP® - Certified Financial Planner
CPWA® - Certified Private Wealth Advisor CIMA® - Certified Investment Management Analyst
RMA® - Retirement Management Advisor CFA® - Chartered Financial Analyst
ChFC® - Chartered Financial Consultant CIC® - Chartered Investment Consultant
Financial Advisors achieve their certifications by investing their time and money to take the courses; pass the exams and do hours of continuing education. Most firms do not require these certifications, the Financial Advisors are voluntarily seeking the certifications to better meet the needs of their clients.
I achieved my Certified Private Wealth Advisor® and Retirement Management Advisor® certifications from the Investments & Wealth Institute. The executive-level education required is taught exclusively through Institute-sponsored classes and at top business schools, including The University of Chicago Booth School of Business and Yale School of Management. CPWA® certification and RMA® certification demonstrates my commitment to enhancing my knowledge and skills to better serve you.
Certified Private Wealth Advisor® is an advanced education and certification program for financial advisors who work with high-net-worth clients on the life-cycle of wealth: accumulation, preservation, and distribution.
Retirement Management Advisor® is an advanced certification for financial professionals that provides them with knowledge to build custom retirement income plans for their clients to match their risk tolerance and income needs.
A recent investor survey showed that these standards were important to them:
My advisor initially met a set of rigorous standards to be certified 90%
My advisor would lose their credentials if they failed to meet ethics standards 89%
My advisor must meet ongoing standards in order to maintain their credentials 87%
The credentialing body that certified my advisor is audited & accredited by an objective 3rd party 85%
Source: Investments & Wealth Institute Investor Research 2020
The Code of Professional Responsibility for CPWA® and RMA®:
- Act in the best interest of the client.
- Disclose services to be offered and provided, related charges, and compensation.
- Disclose the existence of actual, potential, and/or perceived conflicts of interest and relevant financial relationships, direct and/or indirect. Take appropriate action to resolve or manage any such conflicts.
- Provide clients information needed to make informed decisions.
- Respond to client inquiries and instructions appropriately, promptly, completely, and truthfully.
- Maintain confidentiality of client information, however acquired, consistent with legal and regulatory requirements and firm policies.
- Provide competent service by truthful representation of competency, maintenance and/or development of professional capabilities, and, when appropriate, the recommendation of other professionals.
- Comply with legal and regulatory requirements related to one’s practice of their profession.
- Maintain a high level of ethical conduct.
As the standards board for the CPWA and RMA Certification programs, the Investment & Wealth Institute is committed to upholding the required ethical standards by instituting a disciplinary process to ensure compliance. Failure to comply can lead to loss of the certification, among other disciplinary measures.
Let me make this clear, all financial advisors are not the same. Financial advisors differ in years of experience, investment philosophy, practice, how they are compensated, certifications, purpose. A lot depends on the firm the advisor has chosen to support them. At Baird we have the freedom to focus on what is most suitable for our clients. Each client has different needs and requires personalized service. Finance is not a second career for me, it is my passion.
Ask yourself if your current advisor…
Has any certifications and if so, what do they mean to you?
How is your advisor growing in their knowledge to better serve you?
How is your advisor keeping up to date on all rules and regulations in the financial industry?
Has your advisor kept your investment strategy and risk tolerance in consideration over the last year?
You can find financial advisors listed in the phone book; in your bank; in your insurance company; in your civic/social organization; in your school/college; in your church; from your tax advisor and on the internet. Do a background check on a financial advisor by visiting www.brokercheck.finra.org.
Gary Foose is a Financial Advisor with Baird Retirement Management in Lake Jackson. Baird is located at 208 Parking Way, Lake Jackson. Gary is on LinkedIn. Gary’s personal website is gfoose@rwbaird.com.
The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.