By Mike Gertsema, CEO & Wealth Advisor
What are professional designations in financial planning?
A professional designation in financial planning is a stamp of approval that demonstrates to employers and clients that the person achieved a particular standard of excellence in their field of work.
A few examples of designations in the financial planning profession are the following:
AIF® Designation is an Accredited Investment Fiduciary, which is a designation and a professional certification that demonstrates an advisor or other person serving as an investment fiduciary has met certain requirements to earn and maintain the credential. It certifies that a professional works by the fiduciary standard.
RICP® Designation is a Retirement Income Certified Professional, which is a designation and a professional certification that demonstrates having more ability to serve senior clients as a retirement financial planner. These advisors have a broader perspective of the field and can give specific advice about retirement income planning and strategy.
ChFC® Designation is Chartered Financial Consultant which is the “Advanced Financial Planning” designation awarded by The American College of Financial Planning. This designation demonstrates the qualification to provide comprehensive advanced financial planning for individuals, professionals, and small business owners.
CFP® Designation is a Certified Financial Planner which is a formal recognition of experience in the areas of financial planning, taxes, insurance, estate planning, education planning and retirement planning. It is owned and awarded by the Certified Financial Planner Board of Standards, Inc. The designation is awarded to individuals who successfully complete the CFP Board’s initial exams, then continue ongoing annual education programs to sustain their skills and certification, including the CFP Board-approved ethics courses.
The Evolution of Financial Planning
So why am I writing about professional designations in financial planning and why is it important to you, right? Well, thirty years ago, when I entered the financial advising industry, the focus was on security registrations to sell investments, such as the Series 7, Series 63, and Series 65.
The Series 7 registration entitles the holder to sell all types of securities with exception of commodities and futures. The Series 63 registration, also known as the Uniform Securities Agent registration, entitles the holder to sell securities in a particular state. The series 65 registration, known as the Uniform Investment Adviser Law Examination, qualifies individuals to provide investing and general financial advice to clients.
Passing the Series 65 exam qualifies individuals as Investment Advisor Representatives. Unfortunately, the industry was focused on the ability to sell and less on the ability for financial planning, tax planning, estate planning, education planning and retirement planning.
The focus was on selling investment products to make a commission and to try to make the customer money. The truth of the matter is financial planning is required before any recommendations should be made. I was very fortunate to start my career with a fee-based financial planning company and was taught the value of planning from the beginning.
It’s About People, It’s About Planning
Consumers today are begging for more service and advice, only to receive websites, toll-free numbers, and videos on how to do it yourself. With all the technology available today, it’s very inexpensive to invest on your own and many people do. However, I’ve learned over the last thirty years that it’s about planning and knowing what you’re investing for instead of simply hoping for the best results because “hope” is not an investment strategy.
We all want to make as much as we possibly can, but at what cost or how much risk are you willing to take and how much money do you need for you to pursue your goal? Money means different things to different people, but at end of the day, money is nothing more than a tool.
For some people, money is the root of all evil and for others, it’s just the opposite. Most people want to have enough to live a comfortable retirement and leave a legacy to their loved ones.
Defining a comfortable retirement or retirement lifestyle is the challenge. Money is a personal thing and a personal journey. Comparing yourself to others or your investment performance to an index is not in your best interest.
We should be focused on how much is enough, and then ask, “Enough for what?” Focusing on an index without consideration to how much is enough for your goals – as well as your income tax brackets and risk profile – is not a solid strategy. It’s like having good news and bad news, the good news is my investments beat the index, the bad news is the index was down over 20%.
Life has a way of throwing unexpected surprises to us and it’s better to prepare than repair. Every journey is unique.
I’ve dealt with parents that never shared their finances with their children, only for the children to discover the size of the estate at death and leaving the children wondering why their parents didn’t enjoy their money.
We should remember that we are not owners of wealth, we are stewards of wealth, and sooner or later it will end up in other people’s hands. Sometimes parents would gift money to their children if they could, but don’t have a clue on whether or not they can afford it.
Gifting money can be a great moment for teaching the next generation about money and how useful it can be if used correctly. It also brings joy to the parents because they get to witness how the gift is benefiting their children while they’re alive.
Our Good News
The reason I started with designations is my colleague and son Nick had a very ambitious goal for 2020 of improving his knowledge and value to our clients. He’s accomplished a feat that I thought was next to impossible by obtaining – in one year! – his RICP® Designation, ChFC® Designation and his CFP® Designation to add to his AIF® Designation. The endless hours of sacrifice, time, and dedication are unbelievable, and for most individuals impossible to achieve. I couldn’t be more proud.
This career is about giving good advice, helping people and keeping ever sharp so you know you’re giving the best advice you can. Consumers want to trust the person that’s giving them advice and assume they are well-trained in field.
You trust your doctor, CPA, lawyer, and veterinarian with the advice and recommendations they give because you assume they’re well-trained and know what they’re doing. You also know that you are paying them for their experience and whatever they recommend you buy it because of your trust in them. The financial services industry is finally doing the same thing and it’s way overdue. You need to have a high level of trust and guidance with your financial professional as well.
Not an Evolution, a Revolution
We are very excited about how far we’ve come in two short years since opening our independent office. We know that this is not an evolution, it’s a revolution to bring more value, knowledge, and experience to our clients and to St. Joseph. We’re going to continue investing in the latest financial planning technology and most importantly more talented people and experience that will make us stand out.
How can we help you? Get in touch today for a complimentary consultation – no obligation, no agenda, just a conversation about how we can help you plan for your financial future.
Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.
Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial or tax advisor prior to investing.