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Enthusiastic educator

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The American College has forged its reputation for 80 years, providing financial advisors with the education and the designations they need to serve consumers. The College’s current president and CEO is Dr. Larry Barton, a lifelong educator who is passionate about improving the reputation and integrity of the financial services industry.

He says a dedication to ethics and true continuing education are the best ways to turn the tide of consumer sentiment and put the term financial advisor on par with registered nurses and CPAs.

Senior Market Advisor: How important are designations in the eyes of consumers?
Larry Barton: I started to speak about the issue three years ago. I think I have been one of the most vocal individuals on the subject. From a consumer standpoint, credentials matter. Consumers today – specifically seniors – when they are hiring a planner or advisor, are looking for someone who has knowledge and depth and credentials. They expect that someone who is creating an advice plan for them has had training and some type of formal credentials. For years, most of that training was done by the companies. They put you through boot camp and you were a sponge for that information and then you went to work with clients. As years have gone by and we’ve learned a lot in education, it’s fair to say that most consumers expect more than just a company training program to constitute your breadth of knowledge.

Consumers expect credentials because they speak volumes about how well-prepared you are and how knowledgeable you are. If you were to look at some of the studies done by the Roper organization and others, nurses consistently rank among the highest in terms of levels of respect in consumers. CPAs are held in very high regard because people know that designation, like an RN, to be something that required much study. Well, when it comes to financial services and insurance, it often ranks very close to the bottom. I think it’s because consumers are bewildered, and in many cases they simply don’t have confidence that they are receiving objective counsel.

SMA: And having designations helps?
LB: The first thing is that consumers have legitimate questions: “Am I being sold a product, or is this person really trying to customize their counsel? Am I there to receive counsel or am I going to be sold a product?” From the advisor’s standpoint, they are in an awkward position, too, because their companies are telling them they must complete this company training protocol, which is very appropriate. You have to seek that knowledge. Here are our procedures, here’s our compliance, here are our procedures for underwriting. All of that is proper. But what companies are investing in the advisor to go beyond the company, the basic training?

I think the industry is dropping the ball on that. Some of them are sending their advisors to weekend designation programs. I’ve been a very vocal opponent of them. I think this industry is headed for class action lawsuits because we have some companies that are sponsoring and reimbursing agents who go to two- and three-day seminars and walk out with a credential after their name. I think consumers, when they hear about it, are going to find it disturbing, and we are going to see sons and daughters come forward saying, “My mom and my dad invested with your company because this agent told us they were certified or chartered in some area of senior planning,” and they believed that meant they had been tested and they were the product of a strong multiyear journey.

SMA: But that may not be the case.
LB: What’s the story? Can you actually get a designation after two to three days in a hotel? The answer in this industry right now is “You bet.” That must stop. Some of these programs are excellent. They are very good. Some of them are really good introductory programs. They teach about senior living, they talk a little bit about annuities, they talk about long term care. They’re very good. But they are not designations. They are not on the same par as a CLU or a CFP or the CASL, designations that come from an accredited college or university. That’s my beef.

SMA: What are the things in your mind that make being a financial planner different from being a product salesperson?
LB: The majority of advisors working with senior clients are not only sitting and helping the senior plan in terms of doing the risk tolerance, looking at a Monte Carlo simulation, looking at the family estate plan issues, looking to see if there are any business implications and tax planning, but they are talking about sibling rivalries. They are talking about Alzheimer’s care. They are talking about the whole notion of family holistic planning, what you need in your family. I call that a needs assessment; different companies call it different things. But a great advisor is going to do a needs assessment on the front end as opposed to product assessment, where I walk in with six brochures. You want DI? I’ve got DI. You want long term care? I have long term care. You think you might want an annuity? We sell variable. I don’t know how you can do that effectively if you have not conducted a thorough needs assessment first.

SMA: And that involves more than finding out what product a person may want.
LB: That means a discussion, an interview, and maybe even separate interviews with a husband and wife. The point is the fact-finding process is essential because what some consumers have complained about is the moment they hit me at the kitchen table, they are telling me I need long term care. Well, maybe I don’t. Maybe I can’t afford a DI policy. Maybe I can’t, but it would be much more useful if you listen to my story before you sold the product. That’s one of the ingredients of communication. It’s not just writing and speaking and reading. A lot of it has to do with listening.

Advisors are not very good listeners. That’s why this industry is burning through 90 percent of its new recruits. I’m talking the insurance side of the house. But the insurance industry last year had a four-year retention rate of a little over 10 percent. How can this industry be sustained when it is burning through 90 percent of new recruits every four years? Maybe we can do a better job on teaching not just prospecting and sales skills, but listening skills.

SMA: Is the ethics drive in this industry for real or is it to counteract the bad press and consumer mistrust?
LB: I hope it is here to stay. Our founder, Solomon Huebner, was a professor at the Wharton School. Dr. Huebner talked a lot about ethics. He basically said that the industry will fall and fail once it loses the public confidence, which is why companies need to continually be investing in ethical training and ethical education. I agree with that. To answer your question, one of the things we started last year, we gave a mandate to our faculty that by the end of 2006, every course must have an ethics component, must have either case studies or chapters or discussion points on ethics. That could include an income tax course, let alone one that deals with gerontology. We’re very proud of that.

The typical advisor that reads your magazine, when they hear ethics, they hear it in the sense of compliance because they are being pounded by the home office because of one compliance requirement or another. The reason that those compliance officers are as aggressive and as dominant as they are right now in companies is because of the abuses that we’ve all read about. But the agent sitting there in Wichita or San Diego didn’t really do anything wrong. It was somebody else. As a result of somebody else’s malfeasance, now they have to spend several hours every week completing forms and online training programs. So the agent or the advisor is feeling increasingly overwhelmed by compliance.

In my heart, I have to tell you, as an educator, that’s not ethics. We need to talk about that the compliance officer is doing a wonderful job in raising awareness about regulations. But ethics as a subject matter to be taught ultimately has to come through experiential learning. It comes by having a great role model. It comes by having training and courses that you offer in your own agency. It comes ultimately when the company, by example, says, “We will no longer sell this product” or “Here is a lesson about something that we learned about one of our agents in Florida that was putting on programs in a hotel and giving people a free filet mignon. Once people came into that program, we find out they were really trying to sell variable annuities to 80-year-olds.”

SMA: Some of these designations require continuing education after you get your designation. How important is that and why should people look at it?
LB: There are a couple of reasons why. The first is you weren’t feeling well and you have a pain in your chest. You suspect you have angina. You went to your doctor tonight who sent you to a cardiologist. You would assume that cardiologist didn’t just leave Johns Hopkins 20 years ago and not keep up. You would assume he is pretty familiar with the latest techniques in cardiovascular disorders. True?

SMA: True.
LB: And the same is true if I had to go to a neurologist. You just assume when you go to a specialist that they keep up on their practice and on new tools and techniques. Some of it is science, but some of it is practice.

SMA: Right.
LB: So I think of that analogy very much. In fact, it has even more credibility when it comes to senior planning because never before have you had 76 million baby boomers. Never before have we had so many senior women who are single, who are vulnerable because they don’t have a life partner next to them to bounce ideas off. Many of them are going to be inheriting from their parents who have a stunning amount of money. Never before have we had so many banks trying to be insurance companies and insurance companies trying to be banks. The lines are being blurred. So we have never had these dynamics all colliding into what some people call the perfect storm or the perfect opportunity. So CE becomes paramount, because when I walk in, it’s nice to know you have these designations, but what are you doing to keep apprised of tax law changes, of estate planning changes and tax codes, etc.

My overwhelming concern on CE is not only that it is important, but I am very concerned about how people are getting CE. One of the trends that has emerged in the past couple of years is that you can read publications. Read an article, complete a questionnaire at the back of the magazine and mail it in. I have to tell you, that is not defendable as an educator. I think you are going to see that come into some of the lawsuits that are being prepared. Because if you knew your neurologist was reading the American Journal of Neurology and filling out a couple of surveys in the back like an SAT exam, [you wouldn't have much confidence]. I want to know that person went to a classroom, they were focused, they had to sign in and sign out, spend a minimum number of hours in that room listening to practitioners and experts, and practices and techniques were demonstrated. I feel the notion of having to read some of these journals and filling out a form is suspect. To say, “I have my CE. I read my article” is not continuing education. You do that because you want to do it. You want to be more informed.

Don’t miss Dr. Barton at Senior Market Expo Sept. 27-29. Visit for more information.


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