Americans are desperate for advice on how to best plan for retirement, and a growing number of financial advisors are equally anxious to get help on how to guide them. The result is a growing number of advisors looking to obtain a Retirement Income Certified Professional (RICP) designation.
According to The American College of Financial Services, the RICP is only three years old, but it immediately became the fastest growing financial advisor credential ever launched in the college’s 88 year history. This week the college announced it has grown to be the number one designation program that it offers.
“When 80 percent of retirement-age Americans get an ‘F’ on a basic retirement income quiz, it’s clear there is a real knowledge deficit around retirement income planning,” noted David A. Littell, RICP Retirement Income program director at The New York Center for Retirement Income at the college. “People need the help of a certified retirement planner to get them on the right path. The RICP is playing a key role in educating advisors to guide Americans in the most challenging financial task of their lives – generating lifelong retirement income.”
About the College and Its Mission
The American College of Financial Services serves exactly the mission that its name indicates. It is an accredited, nonprofit college for financial advisors. It offers a variety of training, certification, a master’s degree and a PhD program.
“Our heart and soul is the financial services industry, and servicing and educating professionals and advisors in the industry,” Jamie Hopkins, associate director in the RICP program told Retirement Wire. “We do that through a variety of programs, one of which is the RICP. We have a very broad impact in the financial services industry. There are over 140,000 advisors that hold an American College designation that are currently practicing. We are the largest educational provider for financial services.”
The college first began offering the RICP designation in May of 2013. Some 1,500 financial planners have completed the program, and another 7,000 are currently enrolled.
“The program was designed specifically to address retirement income planning,” explains Littell. “We thought that was what advisors needed. That is what they were asking for. That is what the industry was looking for.”
The RICP program consists of three in-depth college-level courses coving topics central to any retirement income plan. They are:
• Retirement Income Process, Strategies and Solutions
• Sources of Retirement Income
• Managing the Retirement Income Plan
Students spend 60 to 80 hours studying for each course, Littell explains. At the end of each course they must pass a 100-question multiple choice exam.
“The layout of the program is three college level courses. The first course is laid out as a process course – what is the process of building a retirement income plan,” Littell says.
“After the process course we go into much more depth on some of the different parts, including Social Security, long term care planning, how to build a retirement portfolio, how to take withdrawals out of a portfolio,” Littell notes.
There are no prerequisites for the RICP program, Littell explains. But he said advisors that have advanced credentials such as the Chartered Financial Consultant (ChFC) or the Certified Financial Planner (CFP) designations are finding the program to be especially helpful.
Littell notes that the RICP offering also comes at a time when Americans are struggling with the challenge of retirement income planning. As evidence, he cites findings from the college’s recent Retirement Income Literacy study, which was profiled recently by Retirement Wire:
• Just 20 percent of retirement-age Americans can pass a basic quiz on how to make their next eggs last through retirement.
• Seven out of 10 Americans are unfamiliar with the “4 percent rule” for a safe withdrawal rate in retirement.
• Only half (53 percent) know that it is best to wait until age 70 to claim Social Security
• More than half of Americans (51 percent) underestimate the life expectancy of a 65-year-old man.
• Only 27 percent of respondents said they have a written retirement income savings plan in place, even though 63 percent said they have a relationship with a financial advisor.
Filling a Training Void
Part of the RICP program’s popularity may be due to its uniqueness. Littell explains that when the college first began discussing the merits of a retirement income planning offering, “There was a clearly identified need, and there wasn’t really anybody filling that space.”
“We did a survey of advisors before we started this and what they reported was that they wanted a process for building a retirement income plan,” Hopkins says. “Before we started the program, we also had an industry group that [met] and talked about all the competencies required – all the things that [retirement planners] needed to know in order to do a good job.”
The result was curriculum focus on several key topics: “long-term care planning, healthcare planning, and different strategies for converting assets into income,” Hopkins says. “We include a lot on Social Security claiming; a lot on choosing pension distribution options; we talk about ethical issues when working with older clients; we discuss all the research about the 4 Percent Withdrawal Rule; and how does asset allocation affect how much you can withdraw.”
“We also cover strategic use of home equity,” Hopkins continues. “There is quite a bit on reverse mortgages — in part because there is more and more research showing that you can use a reverse mortgage strategically; not just as a last resort, but as a strategic part of your retirement income plan. You can use it as a line of credit, and there are some studies that show you might be better off taking it earlier. Some of the research supports that, although a lot of people have very strong feelings about reverse mortgages, and some of it very negative.”
Early participants in the program have reported finding the Social Security training to be especially valuable, Littell says.
But perhaps the program’s greatest offering is to expose financial advisors to different schools of thought on how to best manage retirement income.
“We are in a field where some people are focused in on building an income floor and then having a portfolio with discretionary income needs; and other people think you should just keep all your assets in a portfolio,” Hopkins says. “We have a number of different ways of looking at in and these people in these various camps are pretty sure that they’re right. You learn about all these different approaches, and I think people like that.”