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As the Need for Retirement-Minded Advisors Grows, Differentiation Is Critical

The job market is only becoming more competitive for financial advisors. Have you positioned yourself for success? Baby Boomers are retiring in droves, fresh-out-of-college Millennials are already planning their financial futures and advisories large and small are responding accordingly. According to Bureau of Labor Statistics, jobs for advisors are expected to grow 27 percent between 2012 and 2022—more than double the national average rate.

Still, there are plenty of retirees and who still haven’t sought professional financial advice. In fact, a national poll by the Indexed Annuity Leadership Council found that 54 percent of respondents have never spoken to a financial advisor. A Society of Actuaries study likewise found that just 52 percent of pre-retirees and 44 percent of current retirees consult one on a regular basis. That SOA study also found that a majority of workers and retirees are concerned that they’ll deplete their savings, that they won’t have enough money to pay for long-term care and that they might not be able to maintain reasonable living standards for the rest of their lives.

Overall, the need for advisors is greater than ever, and consumers at least seem to recognize their shortcomings when it comes to planning, saving and investing. The hurdle for advisors, then—particularly those new to the profession – is positioning themselves as true resources to potential clients. The right combination of certificates, specializations, experience and partnerships can help, both with building and marketing a valuable and diverse set of skills.

The Right Certifications and Designations

Having a few letters after your name can’t hurt, but they’re not always worth the time and effort they take to earn. “I’ve seen outstanding estate planning and retirement planning work from guys who have no designations, and I’ve seen horrible work come from guys who have CFPs,” said Chris Alberta, president of Alberta Enterprises and CEO of the Senior Benefits Group. “Plus, if you get referred from a distinguished person, you’re not going to be looking for letters.” Retirement-minded clients care about their security and peace of mind, so a solid track record and word-of-mouth advertising are key. Certifications and designations are just the icing on the cake, and whichever ones you seek should help to build your own skills and your clients’ confidence.

Which certifications really help to achieve those goals? The CFP, held by roughly 20 percent of all financial advisors, may be a good place to start. According to the CFP Board’s research, 87 percent of clients who work with an advisor with a CFP are “satisfied” or “very satisfied,” compared to 72 percent who work with an uncertified advisor. The organization’s statistics also indicate that CFPs with less than ten years of experience are twice as likely to earn more than $215,000 annually.

Of course, correlation doesn’t equal causation, and while the CFP is certainly well respected, not all advisors view it as an ideal or even worthwhile option. “Certifications are great, and I’ll never tell someone not to get one, but I think the CFP is a little overhyped,” said Jeremy Shipp, president of Harbor Wealth. “It tends to be branded as the industry standard, but you can get the same amount of useable knowledge through the ChFC.” The American College’s Chartered Financial Consultant program is more customizable, according to Shipp, as it allows advisors to tailor their course loads to retirement-specific topics.

“As far as retirement planning goes, the CLU (chartered life underwriter) designation can be even more useful,” Shipp added. The CLU’s learning objectives specifically include estate planning, succession planning and life insurance. While prospects may not know the differences between the CLU and other designations, focusing on a retirement-specific certification is still a great way for new advisors to learn their craft as efficiently and cost-effectively as possible.

Aside from the CLU, the RICP (retirement income certified professional) and RMA (retirement management analyst) designations may also be worth a look. “I was really impressed with their real-world knowledge and useable information,” said Shipp. Like other certifications, though, they can help to build a skillset specific to retirement planning, and they may earn respect from colleagues and potential partners—but they’re probably not going to be the deciding factor for most prospects.

Specialize or Generalize?

A common question in the industry, the decision to specialize or generalize can be tough for the advisor who hasn’t built a solid clientele or honed a specific skillset. A specialization may be more marketable, but a general practice keeps the door open to a larger and more diverse set of clients.

In such a saturated market, however, specialization is probably the safer route, not to mention more enjoyable. “In our industry, everyone is trying to be a jack of all trades but an expert in nothing,” said Alberta. “Ideally people would be passionate about becoming advisors on specific topics.” From estate management to retirement income planning to small business succession, there are plenty of specialized paths advisors can take as they market themselves and continue their educations. It’s still possible to advise those clients on a wider variety of issues and investments, but casting a narrow net can actually lead to more and longer-term business.

Not every aspect of retirement is worth a specialization, however, and some topics should be familiar to just about anyone helping retirees and pre-retirees—Social Security in particular. “Social Security planning is getting a lot of publicity right now, and it’s definitely a system you want to have a grasp on, but you miss the bigger picture just focusing on that,” said Shipp. Alberta agreed, noting that, “A guy with a CFP designation already knows Social Security ten times better than anyone doing a Social Security seminar.” Collection strategies are important, of course, but a narrow focus on Social Security may not provide enough value to reign in and retain a solid clientele.

Partnering With Trusted Experts

For clients who need advice you don’t feel qualified to provide, however, one of the best ways to boost your value as an advisor is to partner with other experts. “I think it’s extremely important to work with other advisors, especially for new agents,” said Rob Kolb, president of Rob Kolb Financial and Insurance Services. “Every time I’ve invested in my business with another advisor, it’s paid huge dividends.” Whether you’re learning from a more seasoned advisor in your field or swapping referrals with a more qualified specialist, your colleagues can become some of your greatest resources as you build your clientele.

In fact, it can even be useful to expand your network to professionals other than advisors and brokers. “I’ve had clients come to me even for non-financial matters,” said Shipp. Seniors seeking financial advice often need help with mortgages, home sales, contracting and other affairs, and it can only help to be able to refer them to professionals you know and trust. “If I put someone in touch with a resource, it elevates me as a resource in their overall financial picture,” Shipp added.

For advisors who do partner up or make frequent referrals, due diligence is critical in ensuring that wealth is shared appropriately. “I’m not always a fan of the referral type marketing, where guys are trying to split commissions with each other,” said Alberta. “If a broker partners with a CPA, who partners with an advisor, revenue might get shared in a way it’s not supposed to be. This is why we’re seeing so many suitability and fiduciary issues right now.” Collaborating with specialists is certainly more responsible than working alone and underperforming, but it must be done in ways that are fair to clients, and that keep the client’s bottom line in mind. These considerations are particularly important when partnering with professionals who might be making commissions off of your clients, or vice versa.

Getting a Solid Start

Partnering with trusted, experienced experts; choosing a specialization based on passion and demand; and earning only the certifications that will build needed skills and instill trust in clients. These are some of the most important steps for the new advisor who has big goals but a small clientele. “I tell younger guys all the time to find out what they’re passionate about,” said Alberta. “Anyone who comes into the business with a generic mindset is really just renting clients.” By narrowing your focus and collaborating with advisors well-versed in other fields, you can provide the kind of clear, lasting value that will attract clients and generate referrals for the long haul.

 

[1] http://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm

[2] http://indexedannuitiesinsights.com/the-changing-face-of-retirement/

[3] https://www.soa.org/Files/Research/research-2014-retire-survey-findings.pdf

[4] http://www.cfp.net/for-employers-of-cfp-professionals/benefits-of-cfp-certification

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