Wachovia Securities was all set to pull the plug and suspend a financial advisor's license last year. The FA's bad behavior?
Putting off taking continuing education courses that the Financial Industry Regulatory Authority (FINRA) requires of all advisors.
"We were serious," says Wachovia's Jim Miller, manager-advanced financial advisor training. "He was late. We told him: 'As of such-and-such date, we will no longer be paying you.' We called our Compliance Registration: 'If you don't hear from us by Thursday, suspend this license.' But we didn't have to go through with it. He complied."
Wachovia, by all means, isn't the only brokerage that takes a tough stance on continuing ed because in 1995 the NASD -- predecessor to FINRA -- and the Securities and Exchange Commission mandated a two-pronged CE program for all FAs. The regulatory element requires completion of a computer-based training program at specified intervals at special testing centers. The firm element calls for brokerages to create and implement annual training programs to keep FAs up to speed on industry issues and products.
"There are advisors who view this as a real educational opportunity; others view it as a big pain in the neck -- if not a noose," says Stan Selbst, vice president of SmartPros, an accredited education and training company for financial professionals based in Hawthorne, New York.
Regardless of advisor attitude, CE is a fact of life -- and a major one, what with the proliferation of new products; myriad, ever-increasing compliance issues; and clients' needs for more complex, sophisticated investments and advice.
In addition to the regulatory-required CE, there are numerous optional courses and programs -- many providing CE credit -- that FAs can take to help expand their body of knowledge and hence, their practices.
Available, too, are training programs that zero in on practical skills -- such as sales and marketing -- which typically do not confer CE credit.
"The better educated a broker is, the better he can service his clients, not only on the specifics of products and services but also on suitability and life-event issues," says Miller, based in Richmond, Va. "Through training, we can raise the level of both knowledge and service."
Moreover, continuing education goes hand in glove with being a true professional. "There is an underlying assumption built around ethical behavior and the need for ongoing education in, for example, medicine or academia. That," notes Selbst, "has [now] been formalized in the securities industry."
Indeed, advisors increasingly realize CE's benefits and are seeking out additional training. "They're looking to grow their practices and supply services in multiple areas. For instance, there's greater interest in investment management-based courses," says Patrick Daxon, director of the Financial Planning Group at Raymond James and manager of the Raymond James Institute of Finance, in St. Petersburg, Fla.
Further, more financial advisors than ever are sallying forth to earn professional designations, notably that of certified financial planner (CFP), along with certified investment management analyst (CIMA), both of which require continuing ed. For the CFP, it's 30 hours for each renewal cycle.
"More and more advisors are realizing that they need to either specialize in, for example, wealth management or retirement planning, or to understand the financial planning process. But they need specialized training to get to that next level," says Dirk Pantone, vice president-business development at the College for Financial Planning, in Denver.
The College provides training courses to obtain the CFP and continuing education programs to help maintain it. To counter what Pantone calls "the commoditization" of CE credits ("You can go online and get them for as little as $10!"), the College has designed an Advanced Special Development series of CFP CE courses. First out is one on retirement health-care issues; upcoming are tax planning for retirement assets, and retirement cash flow.
Be aware that certain designations, such as those promoted as providing expertise in financial planning for seniors and that require little or no training, have come under federal scrutiny: Some "certified" advisors have led clients into unsuitable investments.
This year, brokerages, in designing their annual firm element programs -- both classroom and/or online -- are again stressing compliance and ethics issues, as well as such focused areas as retirement planning.
Wachovia, for instance, has CE courses on elder concerns -- like income distribution in retirement, investments for seniors, spotting elder abuse -- and annuity products. "We want to beef up our knowledge" of fixed and variable annuities, and structured investments, notes Miller. As part of its Enterprise Training, the firm is also presenting programs on privacy, anti-money laundering and ethics.
"Compliance is one of the biggest [issues] on virtually everybody's mind because [non-]compliance gets you bounced out of the industry," says Selbst of SmartPros, whose numerous CE courses include those on anti-money laundering and ethical issues, as well as on hedge funds.
The Certified Financial Planner Board of Standards, in Washington, D.C., is "constantly changing" training topics based on financial planner input, says Carol Lee Roberts, managing director-examinations and education. Right now, it has an increased number of courses relating to distribution planning and benefits packages. "As the regulatory climate and tax law change, the education and examination change to reflect that."
The CFP Board is pushing, largely through press coverage, to educate the public about its designation. And it is working with large firms, such as Merrill Lynch and Morgan Stanley, "to [have them] realize the CFP's value" versus brokerages' internal designations," notes Roberts.
"It's the title of the week and the designation of the month as far as being, say, a specialist in retirement or in estate matters," she remarks. "With a CFP, you know exactly what you're getting. It takes a commitment to go through an educational process, examination, get the required experience and abide by a very stringent code of ethics that's enforced by the CFP Board."
Being the Best Advisor You Can BeBut do most clients understand what those letters, "CFP," following an advisor's name connote? "It's wrong to make the assumption that the average American knows what 'CFP' means," says personal performance coach Darci Hemsley Brown, managing associate of Aaron Hemsley & Associates, in Henderson, Nev.
"The financial advisor has to be the one who educates the client. And the time to explain what 'CFP' stands for is in the initial interview," says Brown, a former college professor of communications who now trains FAs. "But just saying, 'I'm a CFP -- that means I'm a Certified Financial Planner' isn't enough. It's got to go beyond that.
"It's more personal and increases intimacy to say, 'I really wanted to become a financial advisor because I love helping people succeed.' Clients like to work with someone who's warm and inviting -- even loving," she says. Hemsley's Maximum Performance Program is designed to help FAs relate more meaningfully with clients.
In the practice management-practical skills area, Wachovia advisors, for example, are offered courses, held in Richmond, showing how to maximize their business profile, with the accent on marketing themselves more effectively.
SmartPros has online and classroom programs in sales skills, product knowledge and collateral marketing materials for seminars, among numerous others.
"You need to know how to tell a good, proper story," notes Selbst. "If you know what the product is and how it works, you're much more likely to be talking to the right people for the right reasons at the right time. Then you'll go home at night, look in the mirror and say, 'I'm proud of myself because I've really helped people with something that's very high in their personal priorities: financial security."
A variety of optional CE courses -- but most providing CE credit and all conducted in person -- is given by the Raymond James Institute of Finance either at St. Petersburg headquarters or in regional workshops. Focusing on financial planning's technical issues, they're directed at RJ advisors who want to broaden the scope of services offered.
The Institute's Financial Planner Series "emulates the CFP curriculum," says Daxon. But "ours goes a step further in showing how to stitch together planning-based or investment management-based tools and the firm's resources to aid FAs in solving [client] problems. We [bring] in other areas so advisors can give much more guidance to clients." New programs are "niche-oriented" and include those on trusts and charitable giving.
While online courses are growing in popularity, to be sure, they may not always be the best delivery method. "Knowledge works well online because you can define it, review it and be tested on it," notes Selbst. "What doesn't lend itself too well online are skills development because you can't be good at [a skill] without practice. One of our mottoes is 'Practice makes better.'"
Often, successful veteran advisors balk at being made to take continuing ed. Sometimes the objections are justified; sometimes, not.
"I have brokers calling me saying, 'Why do I have to take annuities? I don't do insurance!'" says Wachovia's Miller.
"The answer is: No. 1, because the firm element is designed for the whole firm, not individual brokers. And No. 2, though you may not do these investments yourself, your client may be doing them with somebody else. So," Miller continues, "if you want to be the best [advisor] you can be in recommending investments, you need to take into account the other stuff clients have, even if you didn't sell it to them."
Which brings us back to getting to know your clients. Training programs can show how, but developing a strong relationship of trust takes time. According to Brown, FAs relate best to clients when they heighten intimacy and, where appropriate, disclose their feelings.
"If you're passionate and excited about something, do you [project] that to the client?" she asks. The idea, partly, is "learning how to maintain eye contact and shaking hands so that you don't come across as timid. Focusing your attention on others not only helps you establish rapport but reduces your fear and anxiety of being rejected because it makes you spend less time thinking about yourself.
"Every advisor dreams that they'll keep their clients forever. The way to do that is to increase intimacy. You can't have a real relationship of trust simply by having a single meeting once a year. Try something new that's not in your comfort zone," says Brown. "There's more to this industry than sales."
Freelance writer Jane Wollman Rusoff is a Los Angeles-based contributing editor of Research and is the founder of Family Star Productions