Experts say consumers need a single term for income planning professionals

The terms financial professionals are using to identify themselves as retirement income experts are “all over the map,” declares Mark Davis, a vice president at Haas Financial Services, Southfield, Mich.

“I think it’s bad for the professionals and the industry, and it’s bad for consumers. It’s creating an identity crisis.”

The terms now being used range anywhere from financial service rep and financial planner or personal financial advisor to more retirement-focused monikers. The latter include: income planner, retirement income specialist, senior income consultant, senior financial specialist, wealth planner, retirement planning professional, and, more recently, financial gerontologist.

And that’s just the short list. Add to it the various traditional terms (agents, reps, brokers, etc.) and also the designations many advisors hold, and the mix gets soupy indeed.

It’s really not an “issue” for people inside the industry, allows Davis. The industry understands the meanings of various terms for its experts.

“But, it is a problem for the consumer,” he maintains, explaining that it’s hard for the public to know “what is what” since there is no common term for the income planning professional.

“There is a definite need for the financial industry to rally around a single term or designation” that refers to the professional who specializes in retirement income plans and strategies, Davis concludes.

Other experts share that view. The issue is about the customer–what word does the customer use when seeking such a professional?

“With the approaching retirement of the baby boomers and the increasing longevity of Americans, circumstances will probably force the industry to come up with a common name for this line of work,” says John Neumeier, first vice president-affinity business at the reverse mortgage firm, Financial Freedom, Irvine, Calif.

“It may take a professional designation to drive this, but it needs to happen–so consumers, when they hear the common term, know what type of work will be done.”

Already, Neumeier says, products and advertising are being changed to appeal to this market. “This will force the commonality in terminology.”

“It will probably be self-effectuating,” predicts Stanley R. Smiley, senior vice president-advanced markets, ING Advisors Network, El Segundo, Calif.

That is, the various names and designation groups that represent this industry “will eventually crystallize to some type of retirement income recognition,” he says. Planners and other income experts will then “use that as their mantra” when interfacing with the public, Smiley predicts.

The problems associated with the current fuzziness in retirement planning terminology are not unlike those identified by the Securities and Exchange Commission, regarding terms investment advisors use to describe themselves, observes Michael DeGeorge, general counsel with National Association for Variable Annuities, Reston, Va.

“Some investment professionals are referring to themselves as ‘financial advisors,’ ‘financial planners’ and ‘financial consultants,’” he points out.

“That raises the question: Can this be confusing to the public? I think it’s a genuine concern.”

To gain some clarity, as pertains to securities professionals, the SEC issued a rule this spring [rule 202(a)(11)-(b)] that clarifies when broker-dealers serving as financial planners can be “excepted” from the Investment Advisors Act of 1940, DeGeorge points out. (The exception is for advice when “solely incidental to” the brokerage service and offered with no fee.)

One statement in the SEC rule sums up the SEC’s view on how terminology can cause confusion: “Of late, the distinctions [between broker-dealers and investment advisors] have begun to blur, raising difficult questions….”

The income planning field is much broader than investment advice, DeGeorge continues. It does include investments but also includes tax strategies, risk management (of market risk, longevity, etc.), bequest requests, housing, health, and order for spending down assets.

“That suggests advice professionals in this field will need to be known by a term that is broader than that of broker or investment advisor,” he says.

Finding that term can be key to building awareness of the discipline, experts agree.

To illustrate, they point to terms like “tax attorney” and “life insurance agent.” These have widespread recognition among the public, so when a consumer is looking for experts in those areas, they can ask around, saying “do you know a good tax attorney? Or, do you know a good life insurance agent?”

The problem with retirement income planning is, there really isn’t a comparable, widely known and recognized term consumers use when they ask around for a specialist in the field, says Cary Cowan, president of Cowan Financial Group Inc., St. Augustine, Fla.

Certain professional designations, like the CFP, have made “enormous inroads” in household recognition, he allows. But as for generic terms relating specifically to income planning, there are none that people commonly and consistently use.

He bases this on experience at his own firm. “At least 80% of my business is with people age 55 and up, and most of the work I do for them is related to planning for retirement and retirement income.

“But our clients don’t come here asking for a specific type of professional,” he says. “Usually, they ask for people who have experience in the financial business, regardless of designations the professionals may hold. They also look for someone with a good reputation for integrity and honesty.”

How does he refer to the services his firm offers? “Our way of looking at this is, ‘it’s a 21st century process,’” Cowan says.

“We discuss how retirement is no longer the way it was for our parents and grandparents; how paying off all debts, including the home, may not be the most propitious thing to do; and how it’s not wise to tie up all wealth in non-producing assets.

“We also talk about how the clients need to consider a rational set of options, in a lifetime financial strategy.”

The advisor has to look at everything in the client’s life, he maintains. “If you don’t know the whole picture, how can you ever plan an income?”

Cowan is not sure there is a word or phrase that suits this entire process, from the consumer’s point of view. Some consumers will probably just ask for a “financial planner who works in this area,” he suggests.

Like Neumeier, Davis believes that the resolution to this issue may rest with the professional designations.

Most consumers recognize the CPA as relating to accountants, Davis points out. So, perhaps the same will happen with income planning. “In fact, I wish the entire industry would accept and use just one designation, like the CFP, which has already had a lot of marketing to the public around it.”

Cowan suggests that income planning may evolve as a subset of one or more of the existing professional designations.

Another possibility, says Davis, is to select a term that reflects certain key factors–”retirement” and perhaps “specialist.” Examples might be “retirement planning specialist,” or “retirement income planning specialist.”

Then, if that becomes a professional designation, the expert would have the generic term and the designation be one and the same, he says.

Davis likes the concept of having the words “retirement” and “planning” in the same term, because both are broad enough to apply to more than financial services.

If advisors have professional designations and licenses they put on their business cards and sales materials, “it would not really matter if the term includes the word ‘financial,’” he adds. The advisor’s financial role would be identified by the designation, license and broker-dealer relationship (when appropriate), he explains.

Another idea is to use the term “retirement income management specialist,” suggests DeGeorge of NAVA. The first three words are now used in a retirement income course NAVA co-developed with InFRE, Lubbock, Texas, he points out. (Companies buy the course for their advisors, who, after they pass it, become “certified in retirement income management.”)

The term “income management” gets a lot of play at Financial Freedom, says Neumeier. Other terms the firm uses include: “maximizing income” and “utilizing income.”

“That’s what we aim to accomplish when we work with pensions, annuities and reverse mortgages,” Neumeier explains.

“These probably are not yet common terms, but they are clear, and people can understand what they mean. So, advisors might be better off saying they are retirement income managers.”

Another suggestion is to incorporate the word “senior” in the term. Most insurance financial designations do not do that, Neumeier points out, indicating that may be a hindrance to recognition.

Something to keep in mind, he says, is that many senior clients are looking for access to experts. They will go to someone, or maybe to a senior resource center or bank, that they trust and then seek referrals to appropriate professionals. Therefore, if the trusted resource is a professional with the word “senior” in the descriptor, it might be an anchor.

The advisors with whom Smiley works, at ING Advisors Network, tend to refer to themselves as “retirement income advisors,” he says.

He likes that term because it uses two key words that relate to this discipline–”retirement” and “income.” Those terms connote what the client is looking for, he says. “Clients want a person with expertise in the retirement income future.”

Many clients are “scared” that they will outlive their money, Smiley notes. So, they are looking for that type of expertise.

To denote this expertise, advisors also need to broadcast that they are specialists, holding a designation or credentials, or that they have technical support in the background and at their disposal, an educationally based group or a team of experts, Smiley says.

“The public needs to see it, and be able to relate to it. The public also needs exposure to it.”

This is not just a matter of the advisor being trustworthy, Smiley adds. “The public wants [to work with] someone who can protect their interests, too….The need is for a skill set that is greater than that of the average individual.”

Because of that need, Smiley says, “I’m envisioning that the good planners, even with designations, will end up referring to themselves as ‘specialists.’”

By whatever name they call themselves, it’s important they “show the quality of knowledge they have or can be connected to,” Smiley concludes. As complexity in the field grows, that will be essential from a tax, legal and regulatory standpoint, he says.

And, says Davis, “the retirement specialist should have all the products available for this type of work, not just one or two. They should use the ones, or the combinations, that make sense for the particular client.”

As for the common term for this work, “it’s probably not here yet, but I’m sure it’s coming,” says NAVA’s DeGeorge.

‘There is a definite need for the financial industry to rally around a single term or designation’ that refers to the professional who specializes in retirement income plans and strategies

What’s In A Name?

Some Ideas Being Floated

?Call it a highly recognized financial designation

?Call it by the process itself

?Financial planner, income specialist

?Income manager

?Income maximizer

?Income planner

?Retirement income planner (specialist, advisor, etc.)

?Retirement income management specialist

?Retirement income manager

?Retirement planning specialist

?Retirement income planning specialist

?Senior financial advisor (consultant, etc.)

?Senior income advisor (consultant, etc.)