Meaningless credentials hurt the entire industry.
Let's face it... credential creep is more than just the problem of confusing consumers by the sheer numbers of credentials they might encounter when searching for a financial planner; the problem for consumers is that some of these credentials are, shall we say, less sincere than others--a lot less.
My awareness of this problem was heightened recently when William Cuthbertson, MBA, EA, CFP, a member of the Alliance of Cambridge Advisors, Inc. practicing in San Juan Capistrano, Calif., forwarded to me an e-mail he'd recently been sent urging him to get his CRFA, or Certified Retirement Financial Advisors designation, from the Society Of Certified Retirement Financial Advisors in Walnut Creek, Calif..
Cuthbertson was offended by the opening pitch: "Learn how to earn 3 times as much from each retired client--join us on September 13 for nine weekly sessions on the Internet and gain expert knowledge in financial planning for retirees. Knowledge is power and we will teach you how to understand every facet of any retiree's financial situation so that every client can be a relationship worth at least $10,000. You will earn more by being of greater value to clients (and we also teach you how to gain additional retired clients." Cuthbertson said to me, "This has me wondering... who are financial advisors helping--their elder clients or themselves?"
The e-mail pitch goes on to say things like, "Would you benefit from...knowing how to assist retirees that desire to liquidate real estate while you earn large commissions or fees [and] eight hours of marketing with integrity and learning the science of seminars, direct mail, advertising and what really works with retirees."
Now, the thing to remember here is that a fiduciary advisor like Cuthbertson is usually going to be offended by language in any offer that suggests one can earn more commissions from his clients because, first, Cuthbertson is a fee-only planner and, second, the whole idea of taking a course and earning a credential to get more money from one's clients sounds tacky and unprofessional.
However, to put this in perspective, I was able to identify no less than 80 credentials a planner or related professional can earn nowadays. These span the gamut from very challenging and non-product-specific, like the CFP designation, to low-hurdle product-specific designations now being investigated by governmental bodies (more on that later). The CRFA, in my opinion, might offend some with its promotions, but it appears quite legitimate based upon its curriculum. Before earning the CRFA, an advisor must engage in 32 hours of instruction, 28 of which qualify for continuing-education credit. This is relatively rigorous, as we will see in a minute.
The key words to look for in the list of 80 are "senior" and words indicating specific products, like "annuity." Take, for example, the CAC designation--Certified Annuity Consultant. The first thing one notices when checking out the organization behind the credential (Annuity National Brokerage Co.) is its Web site. It's got that pieced-together-by-fourth-graders look so common among Web sites for product-pushing entities--not to mention the site's top banner that screams, "Show Me the Money!" and statements on the Web site like, "There's No Business Like Money Business® and the Annuity Business is Money Business!" Compare this to the Society Of Certified Retirement Financial Advisors' home page and you will see the difference in what I call "Web site integrity."
Next, dig into the details of the CAC and you'll find it's actually difficult to find the requirements for earning the CAC. Clicking on the "CAC Certification" link further down the home page, one would expect to find the information he needs. However, after clicking on that link, one still must search around a bit to learn that, "The ANBC Certification Program is an in-depth six-part seminar and exam" and "You can become an ANBC Certified Annuity Consultant by enrolling in the Accredited Certification Program at Annuity Expos or at the ANBC Financial Center."