What is wealth management, and what do professionals who call themselves wealth managers actually do? Those were the questions the Investment Management Consultants Association sought to answer when in commissioned a year-long study in 2011.
“The certifying bodies of a particular industry are usually the ones that define what that particular industry is or does,” Sean Walters, IMCA’s executive director and CEO, said at Schwab Impact 2012 in Chicago last week. “A pediatrician heals children, which is defined by the board of standards. It’s something the CFP Board has done for years with financial planning.”
One of the reasons for the study, Walters said, was “we found the term ‘wealth management’ was being used in a fast and loose manner. As an industry, we were not being very good about it.”
Kryterion Test Services, a professional certification test development and delivery company, initiated the three-phase job analysis on behalf of IMCA last year.
“We wondered if there would be a big overlap in how wealth management was defined when compared with the definition of financial planning from the FPA and CFP Board,” he added. “One of the biggest surprises to come from the survey was that there was not. It was a validation of the unique skills that our members offer their clients.”
He noted that the branding campaign undertaken by the CFP Board on National Public Radio says that financial planning is about “budgeting, insurance and retirement,” yet none of those are unique to high-net-worth individuals and families.
“The line is drawn at $5 million in net worth. Fully 43% of respondents said that is the starting point. Estate planning was also a key ingredient. Also, being able to address the needs of executives and closely-held businesses were further differentiators. Special skills are needed.