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Dana Anspach

Financial Advisor Designation Proliferation is a Disaster…

By February 13, 2012

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My comments below are in response to a blog by Andrew Gluck of advisors4advisors.

In his post Financial Advisor Designation Proliferation is a Disaster for Consumers and Retirement Management Analyst Designation, A New Designation Sponsored by Product Manufacturers, Illustrates the Threat to Professionals, Andrew comments on the RMA designation, a designation I hold, and on RIIA, the Retirement Income Industry Organization, an organization I have been part of since 2009.

Andrew says that, "RIIA appears to be a good organization. So this story is not meant as a knock against RIIA"  and he goes on to say that "...the group is impressive. Its board of directors includes representatives from the largest and smartest companies in the financial advice business, Bank of America's Head of Personal Retirement Solutions, David Tyrie, the former head of the mutual fund industry trade association, Matthew Fink, the top financial whiz from Ibbotson Associates, Peng Chen, and other powerful people."

He then asks, "But why did product companies have to go and create their own designation? Why didn't these powerful companies just go to the existing professional organizations and support their effort to educate their professionals?" and he says, "While RIIA may actually do great work -- it is backed by big bucks to pay for research studies and has attracted numerous academics to its board of "special advisors" -- creating yet another designation for retirement advisors only will confuse consumers."

I felt compelled to comment.

Dear Andrew,

I appreciate your comments on the RMA designation and RIIA organization. I am a fee-only advisor, member of NAPFA and hold my CFP® designation. I am a member of RIIA and serve as Chair of their Practitioner Peer Review committee, and I (obviously) write for a division of the New York Times called About.com as their Guide to MoneyOver55.

As I specialize in working with upcoming retirees, I first attended a RIIA conference in 2009. What impressed me the most was instead of a roomful of marketing and sales professionals, I found myself surrounded by academics; CFAs and MBAs, all tackling the problem of retirement income from a scientific angle. The caliber of people and level of thoughtful discussion far exceeded that of any other conference I had, or have, attended in my 17 years of practice. When they offered the RMA designation in early 2010, I was one of the first to sign up.

As a CFP® I can tell you the profession of planning for retirement income takes a different skill set than that of general financial planning that is focused on the accumulation of assets. There is a desperate need to educate advisors on the process of planning for income, as proper planning can have a significant impact on the financial security of our nation's retirees. General financial planning courses do not provide the level of detail and education needed, just as a general medical degree does not qualify someone to become a surgeon, an endocrinologist or a cardiologist.

Andrew, let me ask you, if you had a heart problem, would you want to see your family practice doctor, or a cardiologist? Consumers seem to be able to wade through the plethora of medical specialties and find what they need. How do we help them apply a similar selection process to the financial community?

It is easy for me to think that as a consumer, if I need to build a stock portfolio, or hire someone to manage a mutual fund, I would seek a CFA. If I am in my 30's and 40's and need a financial plan to get me on the right track, I would seek a CFP®. If I am a business owner designing a buy/sell agreement funded with life insurance, I would seek a CLU. If I have complex tax planning needs in addition to financial planning needs, I would seek a PFS. Of course this is easy for me to distinguish, as I am in the industry. Perhaps what is needed is not less specialization, but more education to help consumers understand the skill set of the professional most suited to provide the services they need.

As a retirement planning specialist, I know in many cases careful planning can add hundreds of thousands to a client's retirement income, or to assets passed to heirs - all without the sale of a single product.

As a fee-only advisor, I encourage consumers to look at where someone's compensation comes from to understand what may be motivating their behavior, and so I understand your desire to look at RIIA's source of funding. I can tell you from the inside, the product companies have not created the RMA designation. It is many people like me, laboring for love (or maybe we're just a little crazy), who have volunteered countless hours of time to contribute to the RMA curriculum and work continuously to improve and expand upon it.

For example, later in 2010, as RIIA began to expand upon their curriculum, I was asked to contribute content to the RMA curriculum, which I did.  The content I contributed had nothing to do with investment or insurance products. On the contrary it had to do with tax planning, and the impact proper tax planning can have on a retiree's after-tax income in retirement. This content was not supplied by, funded by or in any way influenced by a product provider.

RIIA's mission is to be a view across the silos, incorporating points of view and research from the insurance, investment, defined contribution, and practitioner perspective to create best practices and a process and curriculum that focuses on process first, with the selection of products to come only after proper planning.

Andrew, your post brings up a valid point about the need to help consumers find a trusted advisor that has a skill set that matches their needs. I invite you to continue your discussion and join us at our upcoming spring 2012 RIIA conference in Chicago in March, and determine first-hand what you think.

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