Two things. First, very few of you understand the FA business model. Second, many of you seem to think if someone is wealthy they inherently become financial experts.
Once every three months I have to say this…most of you have no idea how the FA model works. You guys that are saying “you go to an attorney for that…that’s a CPA issue…” You don’t understand the services you’re provided when you go to a place like Morgan Stanley or a high end RIA. Sure, you go to Ed Jones with a $50k rollover, you’re not getting the full service treatment. But, if you have even fairly significant wealth you get all these services at one place. You go to a place like Morgan Stanley and you’ll get an investment advisor, tax expert, and estate planning specialist - among other things - in one team. If you’re arguing about what, if any, value a CFP adds…hell if I know. But, if you have money and especially if your life doesn’t revolve around finance, you need a team like this to watch out for you and your family.
To the second issue, too many times people say “you could read a book and know everything you need to know about asset allocation.” That’s fantastic. I could read a book and probably fix most of the crap around my house too if I wanted. But, I’m busy and don’t really want to do everything myself. I’m cool paying an expert to get stuff done. You think a guy that’s made his money in a non finance related field just automatically knows how to put it to work? How to plan for retirement or their kids college? No, nor do many of them want to. They’re busy doing whatever it is that made them wealthy to begin with. They’re happy to pay someone 1% a year (or much less) to do it for them.
TL;DR - There’s big difference between a Family Office and a Edward Jones rep. Most wealthy people are completely ignorant about finance and don’t care to learn about it. It’s important these people get a good team of financial professional around them. This really has nothing to do with OP’s original question. Just clearly up some way too common misconceptions.
^Agreed STL but do family offices provide legal services? I was commenting on obvious legal issues not whether you go to a CFP or CFA for whatever service you need. If you are gifting millions of dollars or setting up some sort of trust that is something that I want done by a attorney.
And some individual(s) in this thread obviously do not know what they are talking about and let’s leave it at that.
We can certainly agree on that. But who those individuals are remains in question.
Blake, I have posted no fewer than a dozen posts about why a CFP is a superior choice for investment advisors than a CFA, at least for the 95% of Americans who have less than a million dollars in investable assets. The only argument you have posited is, “You are wrong about how much an attorney charges per hour.” Can I assume, then, that the other 99% of what I posted is true?
If your point is that you are more cost-effective than an attorney I agree (even at $300/hr), however those looking for the cheap route often get what they pay for.
And from the FOs I know well, legal/estate is handled internally by attorneys on staff. FOs are unique, so cant say across the board…but never seen them dial up a local CFP for anything, ever, ever.
I concede the argument that mom and pop investors should stay away from CFA folk, we are not geared to handle the simplicity and boredom associated with these people… I can’t imagine caring if tweaking someone’s asset mix could potentially make them an additional $250/yr…so I am glad someone is around that takes that stuff seriously.
However, if you have $20m, are you better off with a CFP or CFA? (rabble rousing)
Yes, many family offices do provide legal services.
If the question is “is a CFA or CFP better for an FA?”…that’s trickier. Honestly I’d probably say a CFP is better, but mainly due to ROI. The CFA is overkill for an FA. The CFP is much more laser focused on financial planning. Everyone should agree getting a CFA is harder and more time consuming than a CFP. But the marginal benefit for an FA is minimal.
Another valid question is do you need a CFP to be a good FA? I’d say no. No more than you need a CFA to be a good PM. Doesn’t hurt though.
Don’t worry, having Blake tell you you don’t have a clue what you’re doing is a right of passage here on AF. If you get him to say he’s LMFAO, it’s like a three point shot.
However, I thought I saw Blake post some actual constructive advice somewhere recently. Maybe climate change is real after all?
Greenman I’ve got a client getting 72t distributions from three iras. One Ira kicked out a 1099 with a code 1 (premature dist I presume) the others correctly issued 1099’s. the tax advisor (ltc) ran the return according to the 1099 and gave the clients a 4k penalty for the year. And, this is the second year in a row that its been miscoded. I’ve got to call the custodian and get them to reissue the 1099 for the last two years. Can’t the tax advisor just explain the miscoded with a form 5329? This is a stretch guess on my end I admit, but I’m trying to figure out if the tax advisor is being lazy. I know, tough time of year. Thanks for your help and appreciate you and a few others sticking up for the scum sucking FA’s. now, I’m back to sucking my thumb in the fetal position while laying in a puddle of my own blood and urine. This thread kicked the crap out of my designation.
99% of the posts I make add value to this forum but unfortunately people do not want to hear the truth more often than not. So I am curious as to which one of my five star posts did you find to be valuable?
For the record–most FA’s I have met are bottom-feeding scum suckers. Most of what I have writen is about an “ideal” planner, and what the designations teach in absolute theory. But I suppose the same could be said for any other credential as well.
I had one large woman about 6 years ago for a one night. Her oral skills were fabulous. And that’s abou it. And that was the one and only time I’ll do anything with a large woman.
I think it’s pretty evident from all my posts across the AF forum that I’m not a CFP.
And I’m still waiting on somebody to post any real argument as to why a CFA makes a superior planner for personal finance to a CFP. Especially for those with less than $1m in investable assets, which comprises 95% of the population. So far, nobody has done it. Palacios has come close, albeit in another thread.
This is one of those instances where you can get your answer just by looking around. It’s obvious having your CFP is preferable to a CFA for financial advisors because successful financial advisors have their CFP and not their CFA. You can make a really good living being a financial advisor. If getting your CFA added value, ambitious FAs would get it. By and large, they don’t. FAs get their CFP, many get their CPA, and pratically none get their CFA.
(Exceptions include research analysts on gigantic FA teams, and some RIAs. You’re not going to find a Merrill advisor with his CFA though.)
I don’t think anyone is arguing that a CFA is a better planner than a CFP for individuals. The CFA is oriented more towards institutional asset managers and family offices or high net worth individuals. In the FO and HNW categories, CFPs and CFAs overlap, and the question is really more whether the client is more like a large individual or a small institution.
I think that the CFA candidate is probably better suited to figuring out if a company is overvalued or undervalued than the CFP person, but there’s plenty of financial planning that doesn’t require company valuation skills.
Some people are arguing that if you have the CFA Charter, then maybe one doesn’t need a planner. I personally think that’s shortsighted, but it probably is true that the CFA Charterholder doesn’t need that much advice about how to construct a portfolio. Still, there’s plenty of other stuff that a financial planner can help with that the CFA charterholder doesn’t necessarily know about, unless they’ve learned it from other sources.
Add to that that the CFA may well be overkill for the kinds of things that CFP people do.