On Apr 3, 10:41 am, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

All other things aside, I really hope the rest of the consuming public
doesn't rely on "media reports" to decide the effectiveness of our
regulating bodies. I agree with you that Dateline and 20/20 would have
us believe that 50% of us are crooks, but the statistics just don't
agree. Of course a show titled "the overwhelming majority of CFPs are
trying to help you" would probably not entice as many viewers.

Thumper,

In 2006 there were 7 suspensions, 16 revocations (permanent), and 9
letters of reprimand. As of March 2007 there were 54,631 CFP
certificants. In other words 0.000421% of all CFPs were found guilty
of making unsuitable investments and/or "not acting in a clients best
interest."

In 2006, however, the NASD suspended 352 individual reps and barred
394 completely. This is out of 658,173 registered representatives.
Thats 0.00113% of all registered reps. Still less than 1 percent, but
over 2.5 times the number of disciplinary actions per capita.

It is the broad use of the word "financial planner" that causes so
much trouble. Insurance agents, boiler-room brokers, accountants and
all manner of registered representatives are allowed to use the term
freely and without certification. Most of the non-certified reps using
the distinction are at the ever-loved low cost brokerage houses.

The Financial planning association has been fighting the free use of
the title for years. The certified don't like the non-certified
dragging their name through the mud. As of last Friday, things may be
starting to change:

http://www.financial-planning.com/pu...070330101.html

By overturning the exception, the large brokerage houses must now hold
themselves to a similar level of ethical suitability that us
independents have had to always adhere. Unfortunately, our compliance
standards still far outweigh theirs.

On Tue, 3 Apr 2007 10:41:35 -0500, "Elle"
<honda.lioness[at]nospam.earthlink.net> wrote:

- quote -


How do independent Certified Financial Planners compare to the
financial planning services offered by the large mutual fund Families?
Thumper


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.

"kastnna" <kastnna[at]auburnalum.org> wrote
- quote -

I thought my previous post did speak to the reality that
other professions do the same. If I was not clear, then I
most certainly did mean to indicate doctors, lawyers,
engineers, and others.

Everyone is trying to make a buck. Consumers should apply
"caveat emptor" to the health care system, legal system,
financial planning business, etc. I think media reports
document well how certification, licensing, law school, CFP
school, etc. are far from a panacea to protect consumers.

So I don't like black-and-white assertions that any
profession must 'do what makes sense for the client,' as
CMJohnson claimed. It's a very loaded phrase. I think it
should be presented side-by-side with the notation that '...
but your chosen professional also has to make a living. So
inevitably some conflict of interest (serve the client;
serve myself; serve somewhere in-between?) will present
itself. How large this conflict is will depend... '

On Apr 3, 7:44 am, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

Financial advisors that are licensed and regulated by the CFP board of
standards, SEC, NASD, and numerous other regulating bodies aren't
concerned with simply staying inside of legal boundaries. We can lose
our licenses (and our right to practice) for making "unsuitable
recommendations" to clients regardless of legality. Nevermind the E&O
costs!

If this ethical dilema is so insurmountable then shouldn't Doctors be
inclined to keep people just sick enough to keep coming back and
lawyers should only provide enough advice to keep their client in
legal straits, but not guilty. Why don't they?

Becuase doctors, and lawyers, CPAs, CFPs, etc, etc, are held to higher
standards by professional boards! Sure there's an ethical dilema (the
principal-agent problem) but there is in many professional service
fields so lets no overly focus on one industry. Have you ever compared
the percentage of complaints filed against AMA certified doctors and
board certified lawyers to certified financial planners? Maybe you
should be targeting a different group.

Like you, I would recommend that potential investors research their
financial planner, ask about his certifications, and educate
themselves so they know which questions to ask and which pitfalls to
avoid. They should do that no matter what the industry. But lets not
make a mountain out of a mole hill. The fact is that if the practices
you so vehemently and regularly warn against actually occurred with
any regularity the industry would either A) no longer exist or B)
become rapidly and harshly over-regulated to the point that the
unethical practices no longer occurred. Its simply the economics of a
capitalist society.

A more logical position would be to advocate using only "financial
planners" that are certified. After all would you go to a dentist that
is not ADA certified. I wouldn't!

"CMJohnson" <johnsoncm[at]mail.com> wrote
- quote -

Financial advisors are in no small part salespeople, right?
So it seems to me that what 'makes sense for the client' is
subjective. It's kinda like a car salesperson or a real
estate agent or any profession where a "sale" is part of
one's income: They are violating no law when they urge the
high end of the product. But the high end does not make
sense for a lot of people.

Similarly, a financial advisor is within the law to urge
purchase of a mutual fund with a 5% front load; a tax
deferred annuity with high expenses; taking out a second
mortgage when maybe the client really needs to cut personal
living expenses; and other practices that are viewed by many
as questionable.

Everyone has a right to make a living. But consumers should
understand that, no, financial advisors do not /exactly/
have to recommend "what makes sense" for people. Caveat
emptor with all professions, because the law's protections
are limited. The law often expects people to read the fine
print and do some of their own homework.

You may also need to sit for the 6 and 63. The important thing about
financial advising is that there are more regulatory bodies than you
can shake a stick at, all of them watching you and what you
recommend. So if your conscience takes a vacation, even for a second,
someone will know. I am an advisor and I can't even tell you how many
trees have died in the name of compliance meetings. This alone should
stop you from worrying about recommending something not in the clients
best interest. Or there's the millions in fines that firms and
advisors have been charged for doing that very thing. Really, you can
make a good living either way, just make sure of two things: 1) No
matter what, whatever you do or recommend HAS to make sense for the
client, and 2) No matter what, give 110% of your attention to each
client and to the necessary compliance. You'll be just fine. Also,
have a pile of cash on hand to live off for the next year plus. It
takes a while to get to the point where you can support yourself just
doing this.

- quote -

This is good info... the degree is a requirement? In a business field
or any field?

The tests a person passes... does this skill need to be maintained
(pass the test every year/decade...) or does "continuing education"
come into play to maintain credential?

The pre-licensing which costs 5k-8k... is there a course or distance
program which you would recomend? Would it be better to spend the 8k
to get a second Bachelors degree (to prepare take the test) or to just
prepare for the test?

jIM wrote:
- quote -

Yes, that's right. The CFP credential isn't a license to do business,
it's what is known in law as a "certification mark," which is a type of
trademark...a brand name for the members of a trade association who
follow the association's rules for using the mark. It's somewhat
analogous to being a Realtor (who still needs to hold some type of real
estate license).

You also need to be licensed to provide whatever services you perform,
some examples:

* Series 7 - commissions for sale of securities
* Series 65 - investment adviser - fees for investment advice or
financial planning that involves securities
* insurance agent, broker, analyst
* tax-related licensing - CPA, Enrolled Agent, tax preparer
* law (estate planning, business planning, tax) - member of a state bar

There are some very narrow areas where you could practice as a CFP but
hold none of these licenses (newsletter publisher maybe?) but most CFPs
are going to hold one or several of the above, or some similar licenses.
Which are needed is to a certain extent a function of state law where
you practice.

-Tad

You may wanna specialize in tech issues. It's only natural.
http://kabatxinio.blogspot.com

On Apr 2, 1:29 pm, "jIM" <noreplysoc...[at]hotmail.com> wrote:
- quote -


To sit for the CFP you must have a bachelors degree from an accredited
university and pass the prelicensing certification course (offered by
multiple universities). If you already have a CPA, CLU, ChFC, CFA or
numerous other designations the prelicensing course is not required.
Prelicensing is $5000 - $8000 if taken via distance learning.

Once you pass the CFP examination, you cannot actually refer to
yourself as a CFP until you have at least three years in the financial
planning industry. This is usually accomplished by working for someone
that already is a CFP, ChFC, CLU, blah, blah... Of course, you cannot
actually sell investments or insurance just because you are a CFP. As
a matter of fact, without the proper licenses it is a violation of
NASD/SEC code just to recommend specific investments to clients.
Whether they ever purchase them or not does not matter.

To sell stocks and bonds you need a series 7 license (a bear of a test
IMO), however a series 6 allows you to sell mutual funds and variable
annuities ONLY (the test is much easier I have heard).

A series 63 is also required to sell securities. It covers the state
specific rules of securities trading (series 7 is federal).

To sell insurance you must pass your state specific insurance
examination and usually a prelicensing course. For variable life/
annuities you must pass an additional insurance test and already have
a series 6 or 7 license.

Off the top of my head, that should give you the certifications you
need to get a good start. Its not as bad as it looks on paper. Of
course, the more you learn/license the more you can offer clients and
the easier it is to earn $$$. When you can legally handle a client's
taxes, legal paperwork, and finances all in one shot it is easier to
justify your fees.

On Mar 29, 8:01 pm, Mark Bole <m...[at]pacbell.net> wrote:
- quote -

I have often thought of a similar switch once I didn't need to work 7
to 5, and could retire early, go back to school, and do this.

What licensing would a CFP need? Do they need a series 7? I assume
licenses depend on what would be "sold" (investments vs services vs
insurance products)?

Can these be studied for (as far as licenses) or is a Bachelors/Master
in a business field needed?

davidelliottburke[at]gmail.com wrote:
- quote -

Well the short answer is "from fees." =)

What you're describing is a fee-only financial planning or investment
advisory practice. If you google those terms you'll find plenty of
information about it. "Fees" include:

* doing ongoing management and billing a percentage of assets. Revenue
from this source is a function of your assets under management ("AUM").
This is the most common billing method among fee-only practices.

* providing advice on an hourly-fee, fixed-fee, or retainer basis.
There's a group of planners that do only hourly work, called (google
the Garrett Planning Network.

* some combination of the above (which is what I do)

There isn't really any limitation imposed by sticking with passive
management, that's a strategy decision. Fee-only advisors who believe in
active management use no-load mutual funds, or institutional share
classes. Those who don't use passively-managed funds and ETFs.

Your basic question is whether it's viable...yes of course it is. If
anything having a fee practice allows you to provide a broader range of
advice. Commission-based "advisors", i.e., registered representatives of
broker-dealer firms, are compensated for sales of financial products.
Any advice provided is supposed to be only "incidental" to the sale of
securities. So that's the business they're in...executing securities
transactions. Especially since last week's court decision throwing out
the SEC's Merrill Rule (something you should read about if you're
getting into this business):
http://www.financial-planning.com/pu...070330101.html

-Tad

davidelliottburke[at]gmail.com wrote:

- quote -

I am not a CFP, but I am a former IT professional now working in a
finance-related industry. I share your concern: if you can't "advocate
products and moves that [you] may not think are really necessary" then I
predict you will not make a lot of money. Have you ever tried and
succeeded in a sales-based job? If not, then you are facing an uphill
struggle -- make sure you have an adequate personal financial cushion
before submitting your resignation at your current job.

Disclaimer: I have never been a very good salesman.

-Mark Bole

I am considering a career switch from software engineering to personal
financial planning. I would pursue an MS in Finance and then get on
the CFP track.

Question for the group: Is there a successful business model for
personal financial planning that does not rely upon commission-based
sales of branded, actively-managed mutual funds?

How do fee-based planners make a living?

I am concerned primarily that in order to reach an acceptable bottom
line and good income in the long run, I may have to advocate products
and moves that I may not think are really necessary.

I think the planner's business model may work fine if you can accept
fees for purchase of actively-managed MFs, annuities, or stock
picking. But what if I primarily want to advocate passive strategies
for personal investment ( i.e, indexing/ETFs, allocation strategy, tax-
protected accounts, cost/tax minimization)?

Suppose I agree with arguments made in David Swensen's Unconventional
Success: A Fundamental Approach to Personal Investment. How would I
construct a planner's business model that would be a thriving and
profitable business?

I'm sure it could be a fee-only business but I'm not sure how
profitable that could really be without a tremendous # of clients.
That worries me. It seems to me that one really needs to be actively
managing other people's money (and a fair amount of it) in the long
run in order to succeed as a CFP.