More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
No alphabet soup, this; incompetent financial advice is a serious threat that leads to tangible losses for seniors, and accredited certification programs help protect against this risk, according to Investment Management Consultants Association (IMCA).
Responding to a request from the Consumer Financial Protection Bureau (CFPB) for comments related to senior financial exploitation, the Denver-based industry advocacy organization submitted a letter illustrating the importance of accredited financial certifications. In it, IMCA claims that the majority of financial credentialing programs meet no third-party standard, increasing concerns about consumer protections.
The letter is similar to one sent by the Certified Financial Planner Board of Standards on Aug. 21.
"Older Americans have already given many years of hard work and dedication—raising families, serving in the military, building businesses—all to become one of our most financially secure generations," CFP Board CEO Kevin Keller said at the time. A CFP Board survey had found "financial abuse victimizing America's seniors," he said.
IMCA’s letter to the CFPB provides supplemental comments to a letter American National Standards Institute submitted. ANSI accredited IMCA’s Certified Investment Management Analyst CIMA certification in 2011. Other key points from the letter include:
- The best manner in which to determine legitimacy, value and authenticity of credentials is through a national or international standard designed for organizations that certify individuals, according to ANSI.
- In the case of CIMA certification, “seniors and other consumers … can be assured that their advisor was certified by an objective, fair, transparent, valid and high-quality process.”
- Fewer than 5% of certification bodies in financial services have completed any accreditation process for their respective personnel certification programs.
- Significant differences exist between certificate programs, university degrees and certification programs, and the three should not be considered equal when establishing financial advisory expertise.
“The most effective way for seniors and all financial consumers to truly determine the value and competency of a financial advisor is to ascertain the credibility of the advisor’s qualifications,” Betsy Piper-Bach, chairman of IMCA’s board of directors, said in a statement. “A certification earned through a properly administered financial certification program provides comfort that the advisor has mastered advanced skills and knowledge.”
As IMCA notes, as an education and credentialing organization, it does not lobby Congress or regulators or advocate for any particular legislative or regulatory position.
Read CFP Board to CFPB: Seniors Drowning in Alphabet Soup of Advisor Credentials on AdvisorOne.