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Monthly Archives: August 2011

 

The boomer demographic has been conditioned to acquire whatever it wants – today.

Debt is the prevalent tool.

A sad part of the denial is the belief that markets move only up and to the right. (“I have time to pay it off”).

“Paying it off” and saving concurrently are not likely. Health and economic contingencies get in the way.

As we know markets drop down and to the right unpredictably and precipitously

If you are a 47 – 65 year old and 40% of your lifetime accumulation disappears overnight the irreplaceable resource is time.

14,000,000 Canadians are in this demograhic age range – our boomers.

“I have enough time to make it up” is simply not true – certainly not if your focus is “Freedom at 55”. Freedom at 70 is more likely.

The good news is that there are solutions and professional financial advisors who can help.

The difficult news is that they are in very short supply and most boomers do not have direct real time access to them.

For more details read…

http://www.linkedin.com/news?viewArticle=&articleID=735954044&gid=1843208&type=member&item=68407578&articleURL=http%3A%2F%2Fwww%2Eadvisor%2Eca%2Fnews%2Findustry-news%2Fcanadians-in-denial-on-lasting-debt-55942&urlhash=whuq&goback=%2Egde_1843208_member_68407578%2Egmp_1843208%2Egde_1843208_member_68407578

Dan Zwicker
Toronto, Canada.

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Today with the passing of Jack Layton, Canada lost a major contributor to its compassionate and generous soul.

Dan Zwicker
Toronto, Canada

 

A classic example of contributing to the Greater Good

 

BANGALORE (Reuters) – Billionaire Warren Buffett urged U.S. lawmakers to raise taxes on the country’s super-rich to help cut the budget deficit, saying such a move will not hurt investments.

“My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice,” The 80-year-old “Oracle of Omaha” wrote in an opinion article in The New York Times.

Buffett, one of the world’s richest men and chairman of conglomerate Berkshire Hathaway Inc , said his federal tax bill last year was $6,938,744.

“That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income – and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent,” he said.

Lawmakers engaged in a partisan battle over spending and taxes for more than three months before agreeing on August 2 to raise the $14.3 trillion U.S. debt ceiling, avoiding a U.S. default.

“Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness,” Buffett said.

Buffett said higher taxes for the rich will not discourage investment.

I have worked with investors for 60 years and I have yet to see anyone – not even when capital gains rates were 39.9 percent in 1976-77 – shy away from a sensible investment because of the tax rate on the potential gain,” he said

“People invest to make money, and potential taxes have never scared them off.”

Rogers Yahoo Finance
Reuters

Aug. 15, 2011

 

“A U.S. STUDY OF AFFLUENT CLIENTS REVEALS SIGNIFICANT DEFICIENCIES IN THEIR FINANCIAL PLANS, ESTATE PLANS, SUCCESSION PLANS AND COMMUNICATION WITH BOTH THEIR SPOUSES AND THEIR ADVISORS”
ONLY 3% OF WEALTHY BUSINESS OWNERS HAVE A SUCCESSION PLAN IN PLACE

MOST FINANCIAL ADVISORS BELIEVE they’re on top of the issues with their key clients. But a recent U.S. study points to alarming deficiencies in estate planning. The study also found there are gaping com¬munication divides between many wealthy investors and their spouses and children, as well as with their advisors.

The research study, conducted this year and commissioned by the U.S. Trust division of Bank of America Corp., surveyed 500 clients with at least US$3 million in investible assets. The survey was conducted among American clients, but there is no reason to believe the findings aren’t equally relevant in Canada.

I had referred to this research, along with two other reports, in my column on the coming retirement revolution in the July issue. This study bears more scrutiny because it reveals significant discrepancies in the way high net-worth clients regard their financial plans.

For instance, the study found that even though 84% of parents think their children would benefit from discussions with a financial services professional, six in 10 have never introduced their children to the professionals managing their own financial affairs.

On the issue of philanthropy, the study found, HNW investors are increasingly interested in seeing the impact of their giving now rather than leaving a legacy when they pass away. Despite this trend, four in 10 have never sought advice about legacy planning or philanthropic strategies.

Further, few HNW investors have well developed plans to preserve and pass on their assets, either to their children or to charity. When it comes to financial goals, less than half of wealthy parents put “leaving an inheritance to children” as a priority; it was fifth on the list of things they want to do with their money, just ahead of “having fun.”

Yet, many HNW investors consider the success of their children to be one of the most important measures of their own success. So, there is a dramatic divide between the priority that previous wealthy generations gave to transferring wealth to children compared with the importance placed on it by many affluent boomers.

Even if your clients don’t have investible assets of $3 million, there are still important lessons from this research.

FINANCIAL PRIORITIES IN RETIREMENT

The study also found that HNW clients, having worked hard for financial security and freedom, now want to be able to travel and focus on relationships.

The importance of travel- not the seniors’ bus tours of the past but trips to exotic locales that include activities such as hiking – creates an opportunity for advisors looking to deepen client relationships. Consider exploring a relationship with a travel agent who specializes in travel to unusual destinations for active seniors.

GAPS IN ESTATE PLANS

The U.S. Trust study found huge deficiencies in the estate plans of many HNW investors, some of whom have only basic financial plans and estate plans.

While 88% of the survey’s respondents had an estate plan in place, almost four in 10 said those plans are not comprehensive. Almost half of the respondents indicated that there are gaps in their understanding of some aspect of their estate plans.

Most respondents’ estate plans contain basic elements, such as a will and beneficiary designations for insurance and retirement savings. But more sophisticated tools – such as revocable trusts, irrevocable trusts, life insurance trusts and charity trusts – were used in only 10%-50% of cases.

Fifty-six percent of those surveyed have not documented their personal property and assets, and half have not documented instructions about the distribution of personal possessions among their heirs often a source of family conflict and heartache in the settlement of estates.

Only 30% of HNW clients in the study have designated a power of attorney. Four in 10 do not have a financial plan that factors in the impact of long-term care or end of-life health-care costs.

Astonishingly, the study also found that only 3% of HNW business owners have a business succession plan in place. That 97% of business owners are without a succession plan should set off alarm bells.

This research report could be a catalyst for talking to your clients about their estate plans. When setting up the next meeting with HNW clients, consider saying: “A recent survey of affluent investors indicated that many had significant gaps in their estate plans around things such as documentation of assets, powers of attorney and the use of different kinds of trusts. I wonder whether this is something we should review in our next meeting.”

COMMUNICATION GAPS WITH SPOUSES

Almost all HNW investors have discussed some aspect of their financial situation with their spouses; 90% have talked about taxes, and almost 80% have discussed investment decisions and risk tolerance.

More difficult conversations are less likely to take place. For example, 30% of HNW investors haven’t discussed income needs in retirement with their spouses.

One-third of HNW client couples haven’t talked about each other’s debts and obligations. Four in 10 haven’t shared the details of their estate plans. Almost half of the survey respondents haven’t discussed plans for long-term care.

(Note that these are overall averages. In every case, men are less likely to have talked about these issues with their wives.)

Ensuring that both members of a client couple fully understand where they stand financially isn’t just the right thing to do – failing to do so could expose you to litigation after the “dominant client” passes away.

As this can be a sensitive topic, you can offer to help break the silence. In cases in which you normally deal with only one member of a couple, suggest a meeting that includes the client’s spouse. Offer to discuss any unanswered questions about where they stand on their finances.

You can always blame your compliance department for insisting that you have this conversation.

CONCERNS ABOUT CHILDREN AND WEALTH

Even among parents planning to leave an inheritance, many HNW investors in the survey were concerned about whether their children will be prepared to handle it. Among those surveyed, only about one in three “strongly agree” that their children will be able to handle their inheritances.

Two-thirds of respondents said their heirs don’t fully understand their wishes on how to divide personal property. Slightly less than half do not believe their children will reach a level of financial maturity to handle the family money they will inherit until they are at least 35 years old. Half have not fully disclosed their wealth to their children, and 15% have disclosed nothing about the family wealth.

Key reasons given for avoiding a discussion about their wealth were: fear that their children would become lazy (24%); they would make poor decisions (20%); they would squander money(20%); or they would be taken advantage of by others (13%).

Sometimes helping HNW clients get what they want from their money can be tricky. There are instances in which clients have made a conscious decision not to share some aspects of their financial situation with their children . .In those cases, you can make suggestions, but you need to draw the line at becoming intrusive.

If your clients are resistant to having these conversations with their children, consider starting with easier conversations – on issues such as dividing personal property (although sometimes this can be tricky) – before getting into more sensitive areas such as overall family wealth.

If your client has a trusted lawyer or accountant, another option is to include that professional in a conversation about how to remove this communication barrier.

GAPS IN CONVERSATIONS WITH ADVISORS

There are also gaps between HNW clients and their financial advisors. Even though 84% of respondents thought their children would benefit from discussions with a financial professional, six in 10 have never introduced their children to the professionals managing their financial affairs.

As well, one in four have never discussed intergenerational wealth transfer with their advisors. Half of those surveyed have never discussed with their advisor ways of teaching children to handle wealth responsibly. Four in 10 haven’t discussed legacy goals.

All of these findings point to some very big red flags for advisors.

For the U.S. Trust report, visit:

 www.ustrust.com/ust/Pages/Insights-on-Wealth-and-Worth.aspx

Dan Richards
Investment Executive
Audust 2011

Dan Richards is CEO of Clientinsighis (www. clientinsights.ca) in Toronto. 

 

 
Centenarians may have a great deal of wisdom to share, but this apparently does not include advice on how to live to age 100.

Researchers at the Albert Einstein College of Medicine of Yeshiva University have found that many very old people — age 95 and older — could be poster children for bad health behavior with their smoking, drinking, poor diet, obesity and lack of exercise.

The very old are, in fact, no more virtuous than the general population when it comes to shunning bad health habits, leaving researchers to conclude that their genes are mostly responsible for their remarkable longevity.

But before you fall off the wagon and start tossing down doughnuts for breakfast just because your Aunt Edna just turned 102, remember that genetics is a game of chance. What didn’t kill Aunt Edna still could kill you prematurely, the researchers cautioned.

The chosen few

The study, appearing Aug. 3 in the online edition of the Journal of the American Geriatrics Society, followed the lives of 477 Ashkenazi Jews between the ages of 95 and 112. They were enrolled in Einstein College’s Longevity Genes Project, an ongoing study that seeks to understand why centenarians live as long as they do. About 1 in 4,400 Americans lives to age 100, according to 2010 census data.

A research team led by Nir Barzilai compared these old folks with a group of people representing the general public, captured in a snapshot of health habits collected in the 1970s. The people in this control group were born around the same time as the 95-and-above study group, but they have since died.

The living, old people in the study were remarkably ordinary in their lifestyles, Barzilai said. By and large, they weren’t vegetarians, vitamin-pill-poppers or health freaks. Their profiles nearly matched that of the control group in terms of the percentage who were overweight, exercised (or didn’t exercise), or smoked. One woman, at age 107, smoked for over 90 years.

Whatever killed the control group — cardiovascular disease, cancer and other diseases clearly associated with lifestyle choices — somehow didn’t kill them. “Their genes protected them,” Barzilai said. [10 Easy Paths to Self Destruction]

Put down that doughnut

Barzilai said that it would be wrong to forego health advice with the assumption that your genes will determine how long you will live. For the general population, there is a preponderance of evidence that diet and exercise can postpone or ward off chronic disease and extend life. Many studies on Seventh Day Adventists — with their limited consumption of alcohol, tobacco and meat — attribute upward of 10 extra years of life as a result of lifestyle choices.

Note also that those people now age 100 lived in an era when obesity was nearly nonexistent and when daily exercise such as walking down streets or up a few flights of steps was more common. Barzilai said anyone can benefit from exercise at any age, even these indestructible old people pushing and exceeding triple digits.

The big picture for the Longevity Genes Project is to identify those genes keeping folks alive for so long and then use them as targets for drug development. For example, most people treated successfully for heart disease ultimately die well before their 90s from yet another age-related disease. This is because we “never change the aging process” with our treatments and cures, Barzilai said.

That is, we can’t turn everyone into centenarians by curing one disease at a time.

“Aging is the major risk factor,” Barzilai said. If researchers can figure out which genes work to slow aging and make ordinary people more resilient to chronic disease, we all will have a much better chance of reaching our 100th birthday — and have enough breath to blow out the candles.

Christopher Wanjek
LiveScience’s Bad Medicine Columnist
Rogers Yahoo News
Aug, 3, 2011

 

ANALYSIS

New York Times columnist issues call to fellow Americans


THOMAS L. FRIEDMAN
NEW YORK TIMES

In the wake of the hugely disappointing budget deal and the Standard & Poor’s credit downgrade, maybe we need to hang a new sign in the immigration arrival halls at all US. ports and airports. It could simply read:

 ”Welcome. You are entering the United States of America Past performance is not necessarily indicative of future returns:’

Because this country is now finding itself in the worst kind of decline – a slow decline, just slow enough for us to keep deluding ourselves that nothing really fundamental needs to change if our future is to match our past.

Our slow decline is a product of two inter-related problems. First, we’ve let our five basic pillars of growth erode since the end of the Cold War – education, infrastructure, immigration of high – IQ innovators and entrepreneurs, rules to incentivize risk-taking and start-ups and government funded research to spur science and technology.

We mistakenly treated the end of the Cold War as a victory that allowed us to put our feet up when it was actually the onset of one of the greatest challenges we’ve ever faced. We helped to unleash two billion people just like us – in China, India and Eastern Europe. For us to effectively compete and collaborate with them – to maintain the American dream – required studying harder, investing wiser, innovating faster, upgrading our infrastructure quicker aud working smarter.

Instead of doing that at the scale we needed – that is, building muscle – we injected ourselves with massive amounts of credit steroids (just like our baseball players). This enabled millions of people to buy homes they could not afford and to fill jobs in construction and retail that did not require that much education.

Our European friends went on a similar binge.

All this debt blew up in 2008 in the U.S. and Europe, and that led to the second problem: Homeowners, firms, banks and governments are all now “deleveraging” or trying to – meaning that they are saving more, shopping less, paying off debts and trying to dig out from mortgages that are underwater.

No one better explains the implications of this than Kenneth Rogoff, a professor of economics at Harvard, who argued in an essay last week for Project Syndicate that we are not in a Great Recession but in a Great (Credit) Contraction:

The challenge is to deleverage the economy as fast as possible

A traffic sign near the U.S. Capitol has it right: The economy shudders to a stop and the U.S. hits a Great Credit Contraction, not a Great Recession.

“Why is everyone still referring to the recent financial crisis as the ‘Great Recession?”’ asked Rogoff. “The phrase ‘Great Recession’ creates the impression that the economy is following the contours of a typical recession, only more severe – something like a really bad cold ….

“But the real problem is that the global economy is badly over leveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation …
 

“In a conventional recession,” Rogoff noted, “the resumption of growth implies a reasonably brisk return to normalcy. The economy not only regains its lost ground, but, within a year, it typically catches up to its rising long-run trend .The aftermath of a typical deep financial crisis is something completely different … It typically takes an economy more than four years just to reach the same per capita income level that it had attained at its pre-crisis peak …
Many commentators have argued that fiscal stimulus has largely failed not because it was misguided, but because it was not large enough to fight a ‘Great Recession.’ But, in a ‘Great Contraction; problem No. l is too much debt.”

Until we find ways to restructure and forgive some of these debts from consumers, firms, banks and governments, spending to drive growth is not going to come back at the scale we need.

Our challenge now, therefore, is to deleverage the economy as fast as possible, while, at the same time, getting back to investing as much as possible in our real pillars of growth so our recovery is built on sustainable businesses and real jobs and not just on another round of credit injections.

Regarding deleveraging, Rogoff suggests, for example, that the government facilitate the writing down of mortgages in exchange for a share of any future home-price appreciation.

Regarding growth, we surely need a much smarter long-term fiscal plan than the one that just came out of Washington.

We need to cut spending in areas and on a time schedule that will hurt the least; we need to raise taxes in ways that will hurt the least (now is the perfect time for a gasoline tax rather than payroll taxes); and we need to use some of these revenues to invest in the pillars of our growth, with special emphasis on infrastructure, research and incentives for risk-taking and startups. We need to offer every possible incentive to get Americans to start new businesses to grow out of this hole.

If juggling all these needs at once sounds hard and complicated, it is. There is no easy, one-policy fix. We need to help people deleverage, cut some spending, raise some revenues and reinvest in our growth engines – as an integrated strategy for national renewal.

Something this big and complex cannot be accomplished by one party alone.

It will require the kind of collective action usually reserved for national emergencies.

The sooner we pull together the better .

 
 

When Nike Stopped Selling Shoes And Began Selling Fitness

During a 1988 meeting between Nike’s ad agency Wieden + Kennedy and some Nike employees, the agency’s co-founder Dan Wieden proclaimed: “You Nike guys, you just do it,” according to Nike legend.

But it would take more than a brilliant tagline to create the gargantuan global brand that Nike is today.

Nike’s brand was built over three decades of strategic marketing, which looked to make Nike the ultimate symbol of the human body’s capabilities. Nike’s true strength doesn’t lie in its vast exposure. The brand is so powerful because it has become synonymous with athletics, fitness and health.

Co-founded by entrepreneur Phil Knight and track & field coach Bill Bowerman back in 1964 as Blue Ribbon Sports, Nike boasted athletic roots right from the get-go, but the company didn’t make the big leap until it took advantage of the jogging and fitness craze that swept the country in the late 1980s.

“Just Do It” began to accompany the white Nike Swoosh logo during this same period. Soon, Nike didn’t even have to put its name in its ads and it flew past rival Reebok, who had overtaken Nike earlier in the decade. It also gained future basketball icon Michael Jordan’s endorsement, again emphasizing stellar athletic performance, which had a particularly massive long-term impact on Nike’s business. “Brand Jordan today sells about twice as much product around the world as when he was playing,” Knight told CNBC in 2008.

Since its new era began, Nike has stayed consistent with its message in both advertising and product development. Some of Nike’s most recent marketing campaigns include anti-obesity ads in China that encourage exercise and women’s health spots that target females of all sizes. And it has stayed up to date as marketing gains new platforms — there’s even an app that allows you compete virtually with your friends over Facebook as you work out daily.

But there are still lingering scars for Nike. Its brand reputation has taken constant hits over the years due to labor abuse accusations and investigations in its overseas manufacturing facilities.

Nike has also been oft-criticized for sticking by athlete spokespersons that have been shamed by scandal, but it’s just another part of the Nike brand. It only cares about performance — as long as these athletes still represent the pinnacle of their sports, Nike will stand by them, as it showed by keeping golf superstar Tiger Woods on the payroll through his huge scandal. A notable exception was Michael Vick, whose dog-fighting antics landed him in jail and kept him off the gridiron. Vick recently re-signed with Nike, four years after being dropped.

Beyond its catchy taglines and creative commercials, at its core Nike’s brand is just looking to represent athletic fitness — and to sell millions and millions of shoes.

Kim Bhasin

Rogers Yahoo Finance

August 1, 2011

 

 
Older Americans: A Changing Market
 
Twenty-five years ago, if you asked someone to describe the typical older American, you’d likely get a snapshot of a gray-haired woman with glasses, sitting on the front porch knitting scarves for her grandchildren. Ask what this grandmother purchased regularly and you’d probably hear a fairly short list—prescription drugs, home-medical supplies, and maybe an occasional bus trip to Atlantic City.

 

Today, that image is all but shattered. While there are still plenty of gray-haired grandmas who like to knit, there are far more older adults who are reinventing what it means to grow old in America. Instead of seeing their mature years as a time to sit back in rocking chairs, they’re gearing up for their next adventure in the 20-plus “bonus” yearsthey now have ahead of them. Armed with greater longevity and better health, they plan to keep working or maybe change careers altogether, buy a new home or remodel their old one, travel to exotic locales or take the grandkids on an overnight trip—and finally do everything else they’ve put off while raising their families and working full-time. What’s more, the majority of today’s 55+ Americans are financially ready and able to purchase the products and services they need to make their plans a reality.

The 55+ population is changing dramatically—driven in large part by the aging Baby Boom generation that is more educated, healthier, and wealthier than any generation before it. The leading edge of the Boomers (born from 1946–1964) turned 60 in 2006, and behind them is a tidal wave of Americans heading toward redefining the 55+ demographic.

Today’s 55+ population is:

Growing rapidly. The number of Americans age 55 and over will jump from 67 million in 2005 to 97 million in 2020. This enormous 45 percent gain compares with an only 14 percent projected increase for the U.S. population as a whole.

 • Living longer. In 1900, the average 65-year-old could expect to live 11.9 more years; by 2003, that number rose to 18.5 years.

 • Better educated. Until 1980, the majority of older Americans had not completed high school. Today, nearly 80 percent of 55-year-olds have a high school diploma, and 23 percent have a bachelor’s degree or more. These numbers are only increasing as the Baby Boomers age.

Committed to homeownership. Older adults have the highest homeownership rate among Americans, with more than 80 percent of householders age 55 and over owning homes.

 • Better off financially. Among the nation’s 18 million households with incomes of $100,000 or more, 27 percent are age 55+. This age group also has substantial financial assets, including stocks. Between 2001 and 2004, people age 55–64 saw their net worth increase 29 percent.

 • Spending more. When compared with other age groups, older consumers’ spending is growing faster and is already above average. Among Americans age 55–64, spending rose 10 percent from 2000 to 2004, including more spent on discretionary items.

Source: Older Americans: A Changing Market, 5th Edition, New Strategist Publications.

These are just some of the numbers that are forcing today’s businesses to sit up and take notice of this huge and powerful group of consumers. No longer can “55+ marketing” be relegated to the senior housing and healthcare industries. Today, every business in America must ask itself, “Are we prepared to serve consumers over age 55?”

Society of Certified Senior Advisors

Aug. 03, 2011

 

(Reuters) – If you’re a wealth manager and working with clients who have more than $1 million in investable assets — or aspiring to be one — does it matter what title you have on your business card?

There are now 118 “professional designations,” or certifications, according to the Financial Industry Regulatory Authority web site (www.finra.org/). But only a few are geared specifically for wealth management. Only one, the Certified Private Wealth Advisor (CPWA), has emerged as a widely-recognized title in the industry for its focus on solving wealthy clients’ complex needs beyond merely managing a portfolio.

Two other designations, Certified Financial Planner (CFP) and Certified Financial Analyst (CFA), cover more general ground, but are also widely-respected in wealth management circles. They are considered invaluable cornerstones for financial advisers shifting their focus to clients’ life goals instead and relying less on asset accumulation.

Industry veteran Tim Kochis, director of new business lines for Aspiriant, is considered one of the pioneers of wealth management, and describes the CFP designation as a “threshold” for demonstrating core competency. Wealth managers “are not taken seriously without it,” he said.

Doug Black, a 30-year industry veteran who consults wealthy families on selecting advisers, also sees high value in CFP and CFA designations. Black, who was chief operating officer of UBS’ private wealth management division and now heads SpringReef Partners, said that the Certified Investment Management Analyst (CIMA) designation also scored highly.

“To us CIMA means someone has a high level of competency and understanding of asset management and the financial markets,” he said.

CIMA and CPWA are both issued by the Investment Management Consultants Association, a non-profit organization based in Colorado with a membership of over 8,000 financial advisers.

CIMA, which focuses on investment advice and asset management, began in 1988 and is now held by over 6,200 advisers. The CPWA, which covers tax, estate and retirement planning, was launched in 2008 and is held by about 400 advisers.

RISING INTEREST FROM ADVISERS

Interest is rising among big brokerage firms, banks and independent advisers who want to learn the special needs of the wealthy, who require different needs, like trust services, or worry more about capital preservation and distribution than accumulation.

The number of applicants for CPWA tag has doubled from last year’s 100. The increase comes despite its cost of around $7,500 and a rigorous course of study (six months of online courses; a week of classes at the University Of Chicago, a half-day examination and continuing education requirement).

“We saw increasing interest from advisers who want to connect with a more profitable market of high-net-worth individuals, and also advisers who had begun working with those clients but realized they may have bitten off more than they could chew,” said Sean Walters, IMCA’s chief executive.

GOOD AT POINT OF SALE

The wealth designation alone is no guarantee of success.

“A credential is like a driver’s license,” Black said. “Having a driver’s license and being a good driver are two very different things.”

Still, he said, a certification to handle ultra-high-net worth clients, such as the CPWA, is “a step in a positive direction” for wealth management education.

Keith Clemens, a Merrill Lynch adviser in the Atlanta suburb of Alpharetta, Georgia, said the CPWA designation has enabled him to tap new markets.

“Before I studied for the CPWA, I really didn’t have the working knowledge about areas like stock options for corporate executives,” he said. “Now I do, and I’m able to step in immediately.”

LPL’s John Moninger, who heads the broker-dealer’s high-net-worth unit for targeting clients with $5 million or more, said he found the CPWA beneficial as a resource and a marketing tool.

“I was able to build a lot of great contacts for expertise in subject areas I need to know about and have a better Rolodex as a result,” Moninger said.

DUE DILIGENCE REQUIRED

No matter what designation a wealth manager chooses to pursue, it’s critical to vet it first.

The designations and certifications aren’t regulated, but they are monitored by state regulatory agencies, the Securities and Exchange Commission and FINRA.

The best place to start is FINRA’s Professional Designations database, which provides key information such as the issuing organization, educational requirements, what type of exams are given, continuing education and experience requirements and the investor complaint or public disciplinary process – if there are any.

FINRA, which regulates broker-dealers but not investment advisers, cautions that it doesn’t approve or endorse any of the designations, and that state securities regulators may prohibit or restrict the use of some designations by both brokers and investment advisors.

FINRA has cracked down on designations that use the term “senior” or “elder.”

What’s more, warns FINRA spokesperson Nancy Condon, brokers “may not use a professional designation in a way that could mislead the investing public, such as by exaggerating the designation’s significance or the extent to which it demonstrates the registered representative’s expertise.”


Charles Paikert
NEW YORK 
Jul 26, 2011

Charles Paikert covers wealth management and family offices from New York. The opinions expressed are his own.