I guess if every night you can go to bed thinking you are doing a service cuz you are not screwing people over as badly as if they were doing it themselves then thats cool. I prefer to think that its possible to do something where you are actually doing good for someone rather than just not doing them as bad. I know that wording is weird. Yep there is a place for Good Advisors, but why is it that they are so few and far between? And yes people are better off with discipline, but why does that discipline instilling advisor also sell them MFs with a 5.75% load and 1.25% annual expense? You cant tell me it is in the clients best interest to cough up that money. Oskigo-agree, so thats my problem with the CFP. If HNW people are looking for investments primarily, why do a designation that is focused on insurance, estate tax, etc?
tvPM Wrote: ------------------------------------------------------- > > Yep there is a place for Good Advisors, but why is > it that they are so few and far between? And yes > people are better off with discipline, but why > does that discipline instilling advisor also sell > them MFs with a 5.75% load and 1.25% annual > expense? You cant tell me it is in the clients > best interest to cough up that money. > You basically answered your own question. The reason there are so few is due to the model there business is based upon. A commission based model is inherently flawed in that it encourages the sales based side of the FA business above all else. This is changing rapidly as the business model in general is moving away from commissions to more of a fee-based or fee-only model. This will shape the financial advisors as well. Once they know their next meal isn’t dependent upon their next sale, they can spend more time adding value for their current clients. Fund companies are also changing as the business changes. No load funds, No-load insurance etc will be commonplace in the next 5-10 years (and wipe out the distribution channels leftover from the insurance business).
mwvt9 - took the words out of my mouth. But, what’s next after asset based fees? Are financial advisors all going to be paid like attorneys and CPAs at some point? Some family offices work this way.
XSellSide, I was supposed to call you awhile back and never did. I would like to make that call once level II is over if the offer is still open. I would think that the business will eventually go to retainers and hourly fees, but would bet that asset based fees will stick around (especially for firms that do both planning and asset managment). I also think that choice for the client will become more important. As the big brokerage firms adapt this model (and they are, they just have to do it slow or risk a PR nightmare) there will be downward pressure on AUM fees and small firms like mine will stuggle to compete. There will always be a place for the FA though.
I agree the commission based biz is subpar and in many cases a conflict of interest. I just find it hard to believe that the reason the career is frowned on by many people is because of commissions. I think it is strange that there is such a huge number of FAs out there, yet it is rare to hear of someone that is actually delivering on their promises or providing quality service. Maybe its cuz I am in a city thats also HQ for a fin planning company that I hear more about it, who knows…I guess I am in the camp that isnt going to blame it all on the model, isnt going to assume it is all changing for the better, I would rather just wait and see when it has changed if things really follow suit. If indeed they do start getting paid in a professional fashion then maybe I would put more emphasis on the CFP or think that the people that get it are actually trying to provide better service…who knows…I think we might be off track from the original post
mwvt9 - no problem. Give me a ring after L2. As long as this thread is completely off track, I think the biggest downside (for the client) to asset based fees is that advisors can get complacent and put clients on “cruise control”. They get paid either way, after all. Advisors that let levels of service and results slip will have their proverbial lunch eaten.
The financial planning industry is still in it’s infancy. It arose out of the need for integrated advice. This is very different from the framented model that once existed. You would go to your insurance broker for insurance, your estate planner for a trust, your broker for a stock, etc. This is where I think most people miss the point of the CFP. It is not meant to be compared to the CFA. The CFA is much harder and deeper in terms of the knowledge needed to obtain it. That being said, it is important that someone, presumably the CFP, would have the knowledge to see the interplay between all the areas descibed above. So to the original poster, it really depends on where you are going to work in the field (where in the value chain you want to add value). I agree with other that most retail client will have no idea what the CFA is and most CFP will have no idea as to the material in the CFA program.
Can someone post a link to an “official” site detailing exactly which exams etc. a CFA charterholder is exempt from taking in order to get the CFP designation? I’ve seen things written in posts here and heard the same elsewhere that the load is lighter post-CFA, but I can’t seem to find confirmation on the CFP site. Much obliged.
http://www.cfp.net/become/Steps.asp TKPk_CFA here is your link…I have my CFP (should have done CFA first).
Thanks, neighbor. (TkPk = Takoma Park)
I’m about 75% sure that I’m going to take the CFP in March of '09. For my career path (private client wealth management), I think it’s one of those boxes I need checked.
There isn’t really a downside for you XSellSide. It won’t be that challenging for you, so you won’t have to dump alot of time into it. There will be benefits too. It will tighten up your knowledge on estate stuff that you touched on in level III. GRATs, NIMCRUTs, etc…all stuff you need to know for the clients you work with.
I’m going for both. I am presently being recruited at a Counseling firm and the “CFA, CFP” Combo is king. Willy
I somewhat left courses and designations on the back burner but with the changing nature of Counseling in Canada, it’s getting key to have both the CFA and CFP. Studying sucks North of 30 especially when you got Chartered at 27. That said, I find the CFP highly practical in everyday life. Willy