Importance of CFP, other designations

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mooose's picture
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Hello everyone, I am new to this business and I am just studying for my series 7 and 66 after being hired by SB.  I know this is getting a little ahead of myself, but it was discussed with my BM about potentially getting my CFP.  I am definitely interested in obtaining professional designations that will separte myself from the competition.  For those of you who have your CFPs, what change in results, new clients have you noticed since obtaining your CFP?  What other designations are valuable to have to succeed in this business?

planrcoach's picture
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For those of you who have your CFPs, what change in results, new clients have you noticed since obtaining your CFP? 
The CFP is the premier professional designation of this industry. That is, if you are a CFP. Plenty of arguements can be made for the other designations - insurance, investment, otherwise. Personally, I just decided to obtain and hold this one license and forget about all the others.
As you pointed out, obtaining the CFP is something you do while you learn the business, and in the the case of your joining a broker dealer training organization, trying to build a "book" and surivive.
Setting yourself apart from the competition is a good idea - for any business. Since the products we offer are commodities, what we have to offer as professionals are things like: specialized knowledge, technical service, the benefit of experience from working with many clients over time, and other obvious benefits.
The CFP is important on a couple of levels. First, it draws a frame and formally defines the body of knowledge, experience and ethics that define the financial planning and investment advisory and insurance advisory professions. As you know, you have to have industry experience to get it.
Next, it helps define you as a planner. If you have traveled to the formal intellectual boundries of the kingdom, you are qualified to report to the emporer. You don't have to get a CFP to do that. But especially for the way some of us think, we are better planners for having made the group excursion to the hinterlands.
It can help give you confidence, and it provides a formal structure upon which to attract and attach the learnings and experience you will aquire by doing. The continuing education requirement will force you to read industry journals or attend group training which will continue to build the intellectual framework.
As far as marketing, in the context of building a practice while affiliated with a training broker dealer, this has been the least important benefit. It is hard to know how much business has found me over the past decade. Having a CFP in my mind helps me to position myself as a professional - I did not chase new clients after the first few years, only working by referral.
You probably want to wait a year or two before jumping in to the CFP studies, since you have so much to learn and do, when you first start, managing all of the critical activities for survival is like trying to drink from a fire hose.
But it is kind of like going to college right after high school - not a bad idea to get this taken care of and apply the benefits of formal education as soon as possible. Don't get busy with your life and forget to invest in yourself.

troll's picture
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Great post planr.I do not have my CFP but am in the process of obtaining it.  I will note that usually those who post saying that the designation is not needed, does not help with credibility or raising incremental business are usually those who do not have it.I do NOT believe that it is a magic bullet and people will line up outside my door every Monday morning because I have the magic initials behind my name.  But, I think it will help with credibility not only with clients but also with other professionals such as lawyers and CPA's.  I also think it will help in competitive situations.

AllREIT's picture
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mooose wrote: I am definitely interested in obtaining professional
designations that will separte myself from the competition.  For
those of you who have your CFPs, what change in results, new clients
have you noticed since obtaining your CFP?  What other
designations are valuable to have to succeed in this business?

The only designation with some real oomph to it is being a CFA/CIMA charterholder. The CPA/PFS combo is also prestegious.

Everything else is mostly a marketing ploy, which is obtained for the reason of "separt[ing] myself from the competition".

IMHO when the CFP decides to make a fiduciary duty to clients part of
the CFP Canon's of professional ethics, alot of RR's are going to drop
the designation.

A fair number of CFP's want to boot the RR's out of the CFP family
since they don't want the shenanagans of the A-share pusher's
contaminating the designation.

planrcoach's picture
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I do not have my CFP but am in the process of obtaining it.
Enjoy the ride, Joe.
IMHO when the CFP decides to make a fiduciary duty to clients part of the CFP Canon's of professional ethics, alot of RR's are going to drop the designation.
Imho, this is unlikely. A fair number of CFP's want to boot the RR's out of the CFP family since they don't want the shenanagans of the A-share pusher's contaminating the designation.
There are a ton of us who will fight tooth and nail. Those who would try to make a virtue out of eliminating the A share option don't deserve to be CFPs. The fiduciary arguement is a subset of the idea of having a professional license to represent a body of knowledge.
I choose to affiliate with a broker dealer that franchises a significant number of CFP licensees. On this particular issue, it would give me great satisfaction to see them lobby on our behalf.
Everything else is mostly a marketing ploy, which is obtained for the reason of "separt[ing] myself from the competition".
No reason to be cynical. This profession can use all of the internal improvement it can get.

AllREIT's picture
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planrcoach wrote:I do not have my CFP but am in the process of obtaining it.
Enjoy the ride, Joe.
IMHO when the CFP decides to make a fiduciary duty to
clients part of the CFP Canon's of professional ethics, alot of RR's
are going to drop the designation.

Imho, this is unlikely.

Which is unlikely? Adding the fiduciary duty to the Cannon's or RR's
droping the CFP because they can't serve two masters; the client and
the B/D?

 Quote:A fair number of CFP's want to boot the RR's
out of the CFP family since they don't want the shenanagans of the
A-share pusher's contaminating the designation.

There are a ton of us who will fight tooth and nail. Those who would
try to make a virtue out of eliminating the A share option don't
deserve to be CFPs. The fiduciary arguement is a subset of the idea of having a professional license to represent a body of knowledge.

Just like every other professional designation, for example M.D, CPA, DDM, JD etc. etc.

Alot of people, myself included don't think A-share pushers deserve to be CFP's. Being a CFP should mean that good financial advice is at the core of what you do, not "purely incidental".

=====

Quote:I choose to affiliate with a broker dealer that franchises a
significant number of CFP licensees. On this particular issue, it would
give me great satisfaction to see them lobby on our behalf.
Which AMP and the rest of the B/D's are doing right now using
the argument "Requiring our CFP designates to act in the best interests
of clients would harm our business model."
It's a stupid argument and the CFP board is having alot of fun dealing with the angry grassroots.

http://www.cfp.net/aboutus/Exposure_Draft_Comments.asp

Quote:Everything else is mostly a marketing ploy, which is obtained for the reason of "separt[ing] myself from the competition".

No reason to be cynical. This profession can use all of the internal improvement it can get.
Acting in the best interests of clients, at all times, under all circumstances, would be a start.

planrcoach's picture
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Quote:

Everything else is mostly a marketing ploy, which is obtained for the reason of "separt[ing] myself from the competition".

No reason to be cynical. This profession can use all of the internal improvement it can get.
Acting in the best interests of clients, at all times, under all circumstances, would be a start.
Agreed. I don't claim to represent anyone other than myself. You might say, any broker dealer would be lucky to have me affiliate.
The reason I affiliate with a broker dealer is because I need to be licensed to be able to represent certain financial planning solutions. In fact, I mainly focus on asset management.
Put my practice up to any RIA, and they would likely say, why don't you just move to RIA?
I don't want the personal liability exposure.
Any way, I am ethical. Thanks for the links to the comments. I'd rather focus on encouraging young people and career planners to join this wonderful industry.
If the CFP board wants to kick me out, it would be a major inconvenience, and unfair. Ethics always resides at the individual producer level.

planrcoach's picture
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Alot of people, myself included don't think A-share pushers deserve to be CFP's. Being a CFP should mean that good financial advice is at the core of what you do, not "purely incidental".
I know there has been a lot of discussion about A shares. I guess if people are pushing anything, they might be crossing the line.
Even A shares could be done right for the client. If you don't believe that, I believe you might have crossed some kind of line yourself.
Saying someone does not deserve to be a CFP would come down to an individual case basis.
There is room for all kinds of philosophical discussion. But apparently you are firing the shot that is heard round the world, therefore, the burden is upon you.
What you choose to focus upon may be important - your dream is important to  you.
But from a financial planning standpoint, even this can be debated:
 good financial advice is at the core of what you do, not "purely incidental".
I think I understand what this means. In my experience in this industry, the distance between thinking and doing is important. I can meet with a new client for an hour and run through the formal steps of the financial planning process. It takes them longer to absorb the process - a number of meetings.
And then what? Implementation, then service, then review.
For those who spend some much energy being deconstructionist about "pure" ideas of financial planning, let them market themselves as such.
We work in an industry that is ill-prepared to meet the needs of the boomers, in terms of bringing alone new planners.
Better for you and I to unite and hold the broker dealers accountable. For the matter, hold the RIAs accountable. You mentioned other professionals, attorneys, doctors and so on.
Being self employed, and paying high deductibles, I can assure you that doctors - specialists - are committing highway robbery in terms of fees. How wonderful that the insurance company is holding them "accountable".
As for lawyers, I think I know a few who just sit down and make up invoices out of retainers, when they need to. If RIA is the golden temple of CFPdom, will there be conflicts of interest?
It right and proper to point out the problems, the solutions I am not certain about. But I may be missing some really important considerations here, as I try to focus on microeconomics as it pertains to my planners, clients, and hobbies.
Tell me what I am missing, please.
 
 

AllREIT's picture
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planrcoach wrote:If the CFP board wants to kick me out, it would
be a major inconvenience, and unfair. Ethics always resides at the
individual producer level.

Planr, I'm sorry. I just read what I wrote and I was being too harsh. I'll post up a longer reply later.

I will let you in on a magical RIA secret.

I don't know if you've ever eaten sardines that were packed in the old
style flat can's. The flat top of the can had a little tab, that you
inserted into a "sardine key". Once inserted, you twisted the key to
peel back the top of the can.

The "merrill lynch rule" is the RIA's sardine key.

anonymous's picture
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Joined: 2005-09-29

I am definitely interested in obtaining professional designations that will separte myself from the competition.
Get the designations for the knowledge, not for the letters after your name.  There is a very real possibility that in a wirehouse setting, you may not be able to use the CFP designation in the future even if you have it.
Regardless, work on your sales skills first because if you can't get clients, you won't be around to use your knowledge.

troll's picture
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AllREIT wrote:

I will let you in on a magical RIA secret.

I don't know if you've ever eaten sardines that were packed in the old
style flat can's. The flat top of the can had a little tab, that you
inserted into a "sardine key". Once inserted, you twisted the key to
peel back the top of the can.

The "merrill lynch rule" is the RIA's sardine key.
Nice analogy.I am a mere IAR, not my own "RIA".  Yet, for clients who get the distinction, they have been most happy to convert to a fiduciary "platform".

BondGuy's picture
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I'm one of the guys without a CFP who doesn't believe they are necessary. I'm successful without one.
Within this thread you're getting a taste of the controversy surrounding this issue.
 
I'm paticularly entertained by the A share shenanigans statement. Like charging a fee forever is always the right thing to do! The arrogance of these types of blanket statements never cease to amaze.
As far as your career is concerned, there is nothing wrong with educating yourself. For that reason alone it may be worth getting designations.
As far as seperating yourself from the crowd, designations won't do it. There's an old saying in our business that clients don't care how much you know until they know how much you care. The down and dirty fact is that this is a relationship business. That's where the rubber meets the road. So while the local CFPs are busy telling prospects about the efficient frontier, I'm asking prospects about what's important to them and how can I help them? Less emphasis on technical wall street, more on down home main street.
Will a CFP or other designation help you land clients? No! It sounds good on a resume. But if you repel them with an aloof, cold, fact spewing, demeanor, you not going anywhere in this biz.
This business is first and primarily a sales task. Something that many CFPs will dispute. Those who are most successful are those who are the best at sales. CFP or not.
 

AirForce's picture
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Mr. Joe Smith GED

I think this would be good.

planrcoach's picture
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The "merrill lynch rule" is the RIA's sardine key.
Good metaphor.
There is a very real possibility that in a wirehouse setting, you may not be able to use the CFP designation in the future even if you have it.
I would bet that you can count on the CFP license staying with registered representatives.
Put it this way, I would not put off getting the license.
So while the local CFPs are busy telling prospects about the efficient frontier, I'm asking prospects about what's important to them and how can I help them?
I'm sure the successful local CFPs are relationship oriented, just the way you are - having your CFP license is not a stigma.
This is a profession, it has philosophical components. In philosophy, there is negation and affirmation. Both are important to define the vision.
The intellectual discussion about the sardine can is important, but it is about opening a stinky can of sardines. To some, this is very important.
It has nothing to do with the importance of drawing a framework around the body of knowledge, experience and ethics that defines our profession.
There is an entire generation of younger "affluent boomers" that need our help, but they don't understand or trust what we do.
If ethics comes down to the individual advisor level, any kind of license that affirms the professional's qualifications is a good thing.
In this business, a big challenge is to keep our eye on the ball. Affirmations are more fun than negations, generally, and as bond guy points out, you have nothing without them in terms of relationship building. Good challenge, bond guy.
On the other hand, I would challenge you to embrace the licensing standard challenge. If you earned the license, I would bet that you would not come back and say, it was not worth the effort and time investment, for a lot of reasons.
Our clients are largely deconstructionist about money, that's why they need our help to put it all together.
It is about time this profession stops eating its young, fouling its own nest, and takes flight to uplift the mass of Americans who need our help to ensure the security and dignity of the generations of those who live the ideal of freedom through economic strength.
Financial ignorance could be our downfall, it has nothing to do with the Merrill Lynch rule, everything to do with affirming the principals and doing the hard work of our profession.
 

troll's picture
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Good stuff planr.  Though provoking.Could you explain what you mean when you say our clients tend to be "deconstructionist with their money"?

planrcoach's picture
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Thanks, sorry if it sounds like I am lecturing.
Here is the Wikipedia definition for my benefit, not yours as I know you have your idea of the meaning of the term itself, first, to keep me on track:
In contemporary philosophy and social sciences, the term deconstruction denotes a process by which the texts and languages of (particularly) Western philosophy appear to shift and complicate in meaning when read in light of the assumptions they suggest about and absences they reveal within themselves. Jacques Derrida coined the term in the 1960s, and found that he could talk more readily about what deconstruction was not than about what it was, most especially in reply to questions posed by others about it.
 Wow! That just about sums up what the CFP world is doing when it fights about who gets to display the license designation, especially when it concerns those who are now working to be licensed, or those who hold the license at a broker dealer. It is like arguing over religion.
So it holds with our clients. In their minds, they already know the basics of investing, taking portfolio withdrawals and so on. Whatever this means, (we know what it means), they then think too much, worry, panic, listen the AM radio talk show host who has an agenda, and appear to shift and complicate in meaning when read in light of the assumptions they suggest about and absences they reveal within themselves - they do it to themselves, all the way up through "Seven Stages of Money Maturity", emotional maturity type stuff.
We do it too, as advisors. Because we are human. That's why we advisors need to stick together.
Our clients, of course, are smart enough to hire us. Most will validate our competence, though, pretty carefully. In other words, they hire us for our specialization and leadership, and intelligent service, the actual doing, not necessarily our technical knowledge.
 
 

WADRED's picture
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 Forgive me for being new and uneducated in the Industry, but what is the "merrill lynch rule"???

BondGuy's picture
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planrcoach wrote:
The "merrill lynch rule" is the RIA's sardine key.
Good metaphor.
There is a very real possibility that in a wirehouse setting, you may not be able to use the CFP designation in the future even if you have it.
I would bet that you can count on the CFP license staying with registered representatives.
Put it this way, I would not put off getting the license.
So while the local CFPs are busy telling prospects about the efficient frontier, I'm asking prospects about what's important to them and how can I help them?
I'm sure the successful local CFPs are relationship oriented, just the way you are - having your CFP license is not a stigma.
The CFPs I compete against are more interested in how the engine operates, than why there needs to be an engine. They are more than happy to lay their knowledge on their prospects. Many times talking down to them in the process. I'll say this, competing against CFPs is good for my business, very good!
This is a profession, it has philosophical components. In philosophy, there is negation and affirmation. Both are important to define the vision.
The intellectual discussion about the sardine can is important, but it is about opening a stinky can of sardines. To some, this is very important.
It has nothing to do with the importance of drawing a framework around the body of knowledge, experience and ethics that defines our profession.
There is an entire generation of younger "affluent boomers" that need our help, but they don't understand or trust what we do.
And this has to do with having a CFP how?
If ethics comes down to the individual advisor level, any kind of license that affirms the professional's qualifications is a good thing.
All ethics are indiviual. What other level matters in a one on one relationship? As for the CFP designation being the gold standard for ethical behavior, that's laughable. They can't possibly police their ranks. This is again evident in my own personal experience. I once worked in a branch with with two CFPs. These two guys are among the biggest theives I've come across in my time in the business. One size fits all VAs with a smattering of penny stocks and ST 3PT Ginnies. But hey, they're CFPs. One also coordinated the CFP regional meetings in our area. CFP ethics, that's a joke. Until The College for Financial Planning can rid their ranks of the likes of 'Planners" like these they aren't the standard for anything. And since they can't ,that will never be. You see the vision, I see the reality.
 
As for qualifications, a license proves nothing more than you can pass a test. A designation program such as the CFP program is nice, in that it puts all the relevant information in one place and presents it in an organized fashion. Where we are going is far beyond that however. We are headed toward fully degreed programs offered at major universities with a BS in Financial Planning or somthing of that ilk. Our profession is going the same way as Architecture and Law, both, non degreed professions until very late into the 20th century. Do I think that's necessary? No. Inevitable? Yes
In this business, a big challenge is to keep our eye on the ball. Affirmations are more fun than negations, generally, and as bond guy points out, you have nothing without them in terms of relationship building. Good challenge, bond guy.
On the other hand, I would challenge you to embrace the licensing standard challenge. If you earned the license, I would bet that you would not come back and say, it was not worth the effort and time investment, for a lot of reasons.
As soon as I replied to this thread I started counting the minutes until that cheap shot would be taken.
Of course to say that I would put down a course that I'd so heavily invested in would be counterintuative. From an educational point of view, I'm positive that the CFP course is worthwhile. But necessary?
Let answer this way. Many if not most of the 50 something airline pilots flying us across the country do not have college degrees. Nor did they graduate from some military program. Today, most airlines require a four year degree of all new hire pilots. So young guys coming up are "BETTER" educated than the generation ahead of them. My question is this: On that stormy night when a compressor fan takes out all the hydraulics who do want at the controls? The guy who read about what to do in a book, or the old experienced hand who wrote the book or could have? I know who I want.
The CFP D is a tool. If I thought it could add value to what I'm doing, I'd already have it.
Our clients are largely deconstructionist about money, that's why they need our help to put it all together.
It is about time this profession stops eating its young, fouling its own nest, and takes flight to uplift the mass of Americans who need our help to ensure the security and dignity of the generations of those who live the ideal of freedom through economic strength.
Financial ignorance could be our downfall, it has nothing to do with the Merrill Lynch rule, everything to do with affirming the principals and doing the hard work of our profession.
Again, how is this relevant to having a CFP?
 

AllREIT's picture
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joedabrkr wrote:
AllREIT wrote:
The "merrill lynch rule" is the RIA's sardine key.
Nice analogy.I am a mere IAR, not my own "RIA".  Yet, for clients who get the distinction, they have been most happy to convert to a fiduciary "platform".It is really powerful. See http://www.tdainstitutional.com/advisoreducation/index.htmFor some idea's on using your sardine key to best effect.Most people just don't know about how traditional B/D's and RR works. A simple "Is your trusted advisor really a salesman in disguise?" theme works wonders. The traditional A-share model doesn't stand up to scrutiny. You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.

AllREIT's picture
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WADRED wrote: Forgive me for being new and uneducated in the Industry, but what is the "merrill lynch rule"???That the financial advice provided by RR's is "purely incidental" to their core activities of selling securities. Thus RR's explicitly do not have a fiduciary duty to act in the best interests of clients. However B/D's go to great lengths to claim they they really do act in clients best interests. RR's are merely registered representatives who act in the firms best interest subject to NASD regulations.

WADRED's picture
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Thanks for clarifying that for me I just Googled it also, so now I am caught up. 

AllREIT's picture
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anonymous wrote:I am definitely interested in obtaining professional designations that will separte myself from the competition.
Get the designations for the knowledge, not for the letters after your name.  There is a very real possibility that in a wirehouse setting, you may not be able to use the CFP designation in the future even if you have it.
Regardless, work on your sales skills first because if you can't get clients, you won't be around to use your knowledge. IMHO you get the CFP to earn the right to talk about financial planning with clients. If you are getting  it just to plaster some fancy letters after your name, you are missing the whole point of personal development.

planrcoach's picture
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BondGuy wrote:planrcoach wrote:
The "merrill lynch rule" is the RIA's sardine key.
Good metaphor.
There is a very real possibility that in a wirehouse setting, you may not be able to use the CFP designation in the future even if you have it.
I would bet that you can count on the CFP license staying with registered representatives.
Put it this way, I would not put off getting the license.
So while the local CFPs are busy telling prospects about the efficient frontier, I'm asking prospects about what's important to them and how can I help them?
I'm sure the successful local CFPs are relationship oriented, just the way you are - having your CFP license is not a stigma.
 
The CFPs I compete against are more interested in how the engine operates, than why there needs to be an engine. They are more than happy to lay their knowledge on their prospects. Many times talking down to them in the process. I'll say this, competing against CFPs is good for my business, very good!
-More power.
This is a profession, it has philosophical components. In philosophy, there is negation and affirmation. Both are important to define the vision.
The intellectual discussion about the sardine can is important, but it is about opening a stinky can of sardines. To some, this is very important.
It has nothing to do with the importance of drawing a framework around the body of knowledge, experience and ethics that defines our profession.
There is an entire generation of younger "affluent boomers" that need our help, but they don't understand or trust what we do.
And this has to do with having a CFP how?
- In this context, if you don't validate this aspect of formal professional educating, nothing.
If ethics comes down to the individual advisor level, any kind of license that affirms the professional's qualifications is a good thing.
All ethics are indiviual. What other level matters in a one on one relationship? As for the CFP designation being the gold standard for ethical behavior, that's laughable. They can't possibly police their ranks. This is again evident in my own personal experience. I once worked in a branch with with two CFPs. These two guys are among the biggest theives I've come across in my time in the business. One size fits all VAs with a smattering of penny stocks and ST 3PT Ginnies. But hey, they're CFPs. One also coordinated the CFP regional meetings in our area. CFP ethics, that's a joke. Until The College for Financial Planning can rid their ranks of the likes of 'Planners" like these they aren't the standard for anything. And since they can't ,that will never be. You see the vision, I see the reality.
-we should strive to see both at the same time. All CFP are not ethical. Unethical CFPs can have their license revoked. This is precisely why more broker dealer affiliates should obtain and maintain the license. Affirming the vision of an ethical and respected profession instead of breaking down into legalistic arguments.
 
As for qualifications, a license proves nothing more than you can pass a test. A designation program such as the CFP program is nice, in that it puts all the relevant information in one place and presents it in an organized fashion. Where we are going is far beyond that however. We are headed toward fully degreed programs offered at major universities with a BS in Financial Planning or somthing of that ilk. Our profession is going the same way as Architecture and Law, both, non degreed professions until very late into the 20th century. Do I think that's necessary? No. Inevitable? Yes
-we,ll see.
In this business, a big challenge is to keep our eye on the ball. Affirmations are more fun than negations, generally, and as bond guy points out, you have nothing without them in terms of relationship building. Good challenge, bond guy.
On the other hand, I would challenge you to embrace the licensing standard challenge. If you earned the license, I would bet that you would not come back and say, it was not worth the effort and time investment, for a lot of reasons.
As soon as I replied to this thread I started counting the minutes until that cheap shot would be taken.
-don't take it personally. I said, I bet you would say it was not worth the effort. Maybe you are being a little defensive here.
Of course to say that I would put down a course that I'd so heavily invested in would be counterintuative. From an educational point of view, I'm positive that the CFP course is worthwhile. But necessary?
-maybe not for you. That's fine. There is a difference between required and optional. The big picture here is about whether we broker dealer affiliates even get to call ourselves CFPs. I don't think you can be totally objective here, either, if you don't hold the license.
Let answer this way. Many if not most of the 50 something airline pilots flying us across the country do not have college degrees. Nor did they graduate from some military program. Today, most airlines require a four year degree of all new hire pilots. So young guys coming up are "BETTER" educated than the generation ahead of them. My question is this: On that stormy night when a compressor fan takes out all the hydraulics who do want at the controls? The guy who read about what to do in a book, or the old experienced hand who wrote the book or could have? I know who I want.
Thats pure logic. Having a college degree does not detract, experience comes. The college degree might be correlated with lower medical costs, lower costs of training, or some other variable. Highest common denominator.
The CFP D is a tool. If I thought it could add value to what I'm doing, I'd already have it.
- I respect you.
Our clients are largely deconstructionist about money, that's why they need our help to put it all together.
It is about time this profession stops eating its young, fouling its own nest, and takes flight to uplift the mass of Americans who need our help to ensure the security and dignity of the generations of those who live the ideal of freedom through economic strength.
Financial ignorance could be our downfall, it has nothing to do with the Merrill Lynch rule, everything to do with affirming the principals and doing the hard work of our profession.
Again, how is this relevant to having a CFP?
- Apparently, the battleground where the Merrill Lynch rule principles are being fought is an important battleground. Like you say, if you have a vested interest, it gets your attention. Thanks for your honesty.
 
 

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AllREIT wrote: joedabrkr wrote: AllREIT wrote:The "merrill lynch rule" is the RIA's sardine key.Nice analogy.I am a mere IAR, not my own "RIA".  Yet, for clients who get the distinction, they have been most happy to convert to a fiduciary "platform".It is really powerful. See http://www.tdainstitutional.com/advisoreducation/index.htmFor some idea's on using your sardine key to best effect.Most people just don't know about how traditional B/D's and RR works. A simple "Is your trusted advisor really a salesman in disguise?" theme works wonders. The traditional A-share model doesn't stand up to scrutiny.
You keep bringing up the A-share thing. Yet you call yourself AllREIT. Something doesn't add up here? So, is that AllREIT Allthetime? You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.
And you ask probing questions why? To figure out which REIT best suits their needs? Or yours?
Sorry Bud, but for someone on the high horse against a segment of our profession your screen name doesn't say much for you.

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, I would bet that you would not come back and say, it was not worth the effort and time investment,

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You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.
If I am an RIA I "break out the sardine key", (at least, the way I understand where this is going) am I being an ethical planner or an unethical salesman?
 

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BondGuy wrote:AllREIT wrote: joedabrkr wrote: AllREIT wrote:The "merrill lynch rule" is the RIA's sardine key.Nice analogy.I am a mere IAR, not my own "RIA".  Yet, for clients who get the distinction, they have been most happy to convert to a fiduciary "platform".It is really powerful. See http://www.tdainstitutional.com/advisoreducation/index.htmFor some idea's on using your sardine key to best effect.Most people just don't know about how traditional B/D's and RR works. A simple "Is your trusted advisor really a salesman in disguise?" theme works wonders. The traditional A-share model doesn't stand up to scrutiny.
You keep bringing up the A-share thing. Yet you call yourself AllREIT. Something doesn't add up here? So, is that AllREIT Allthetime? Bondguy You are grasping at straws. I'm AllREIT because back when I starting out, I ate very little but sardine's so as to save money for my REIT portfolio, the income from that portfolio ment I could build my book the right way. If I had to do it over again, I would have spent more on breath mints.Showing your personal brokerage statement, really builds trust. "I  own it myself."As for REIT's, most of my accounts are in a DFA type portfolio built with ETF's. I include some REITs to goose up the fixed income portion of the portfolio.Quote:You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.
And you ask probing questions why? To figure out which REIT best suits their needs? Or yours?
Sorry Bud, but for someone on the high horse against a segment of our profession your screen name doesn't say much for you.As an RIA, how could any investment "suit my needs"? I don't get paid to sell investments. All I have to do to to wedge a client from a B/D is find out if they have the littlest crumb of discontent, and then you start working on that. Revealing to people how the B/D system works and merrill lynch rule can get clients to positivly hate their stockbroker. They feel lied to and deceived. After all, if you are a financial advisor why don't you offer advisory accounts?

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planrcoach wrote:You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.
If I am an RIA I "break out the sardine key", (at least, the way I understand where this is going) am I being an ethical planner or an unethical salesman?I think of it like "Operation Rescue" More seriously, the ball is in the clients court. I don't promise anything I can't do or won't do. When you lay out the plain facts of how B/D's work vs how RIA's work, you will find most clients close themselves.

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I think of it like "Operation Rescue" More seriously, the ball is in the clients court. I don't promise anything I can't do or won't do. When you lay out the plain facts of how B/D's work vs how RIA's work, you will find most clients close themselves.
Hmmm...
All I have to do to to wedge a client from a B/D is find out if they have the littlest crumb of discontent, and then you start working on that. Revealing to people how the B/D system works and merrill lynch rule can get clients to positivly hate their stockbroker. They feel lied to and deceived. After all, if you are a financial advisor why don't you offer advisory accounts?
Sounds like you might be selling something.
Not sure if this applies here, but remember Joe Conrad:
"...no man ever understands quite his own artful dodges to escape from the grim shadow of self-knowledge."
If we were to pursue this line, I'm sure I could think of a lot of questions for you that relate to ethics.
 

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All I have to do to to wedge a client from a B/D is find out if they have the littlest crumb of discontent, and then you start working on that. Revealing to people how the B/D system works and merrill lynch rule can get clients to positivly hate their stockbroker. They feel lied to and deceived. After all, if you are a financial advisor why don't you offer advisory accounts.
Take it up a level. Dems' fightin' words.   Having done my research and being a CFP, RIA is a okay, so is broker dealer. The reason I mention CFP is because of the debate about whether broker affiliates are less holy than thou.
Whether you are CFP or not, the moral authority of various self-serving platforms in industry is being obfuscated.
I challenge you to a dual.

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planrcoach wrote:If we were to pursue this line, I'm sure I could think of a lot of questions for you that relate to ethics
Such as? And be careful about stones and glass houses. Any sales activity with customers who know less than you do has ethical implications. However, some business models have more ethical wiggle room and possibilities for misrepresentation than others.

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AllREIT wrote: As an RIA, how could any investment "suit my needs"? I don't get paid to sell investments.  
You sell investment advice (as are many of the brokers you're inaccuaretly describing with your "A share" stories, depending on the account type) and as such, you have conflicts of interest with your clients, whether you care to admit them or not.
AllREIT wrote: After all, if you are a financial advisor why don't you offer advisory accounts?
 
Who says he doesn't? I'm at a wirehouse and I do.

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AllREIT wrote: Thus RR's explicitly do not have a fiduciary duty to act in the best interests of clients. However B/D's go to great lengths to claim they they really do act in clients best interests. RR's are merely registered representatives who act in the firms best interest subject to NASD regulations.
That's marketing nonsense from someone who's deluded enough to think he has no conflicts with his own clients. The day you send them away with a book, telling them they don't need you, they can balance DFA portfolios themselves, I'll believe your "no conflicts" story.
 
BTW, RR's have the legal obligation to disclose all conflicts of interest, do you? When did you last tella client to take money out of the accounts you manage so they can pay off high interest loans? When did you last tell them to shop other RIAs to see if their portfolios were better suited to them or had better performance?

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AllREIT wrote: A fair number of CFP's want to boot the RR's out of the CFP family since they don't want the shenanagans of the A-share pusher's contaminating the designation.
I'm a CFP and I'd like to see better supervision of the mom and pop RIAs that seem to have a problem with regularly converting client fund to their own uses, or the CFPs who make dishonest claims to clients and prospects about one business channel having a moral advantage over others....
 

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mikebutler222 wrote:AllREIT wrote: As an RIA, how could any investment "suit my needs"? I don't get paid to sell investments.  
You sell investment advice (as are many of the brokers you're inaccuaretly describing with your "A share" stories, depending on the account type) and as such, you have conflicts of interest with your clients, whether you care to admit them or not.Except that I'm openly selling investment advice, rather than selling securities and implying I that sell investment advice. It's a big difference and it is one that clients notice.Given that I charge for advice (via hourly fee's) or custody (which hourly fee's are prorated against) It's pretty clear to clients that I'm compensated on advice mostly. About half my clients don't do custody, since they prefer to do trading themselves.

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planrcoach wrote:
You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.
If I am an RIA I "break out the sardine key", (at least, the way I understand where this is going) am I being an ethical planner or an unethical salesman?
 

 
Clearly you're being a salesman, and the worst sort. The sort that claims you have a monopoly on integrity....<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

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AllREIT wrote: Except that I'm openly selling investment advice, rather than selling securities and implying I that sell investment advice. It's a big difference and it is one that clients notice.
 
First off, it sounds as those you're lying to prospects about the guy they deal with at XYZ. He could be acting as either a RR OR and RIA.
<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 
Secondly, unless or until to send your clients out to other shops that outperform you, or provide services cheaper than you, or send them to a library to learn the process for managing the simply DFA fund portfolios you run, you’re a salesman, and of the worst sort.
 

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mikebutler222 wrote:
That's marketing nonsense from someone who's deluded enough to think he has no conflicts with his own clients. The day you send them away with a book, telling them they don't need you, they can balance DFA portfolios themselves, I'll believe your "no conflicts" story.
I explain to people what I do, how I do it, why it works, and so forth. Again that's where service is the difference. Alot of people don't want to fuss with money, and they are ok with paying for money management.People who can manage money themselves aren't my clients.Quote:
BTW, RR's have the legal obligation to disclose all conflicts of interest, do you? When did you last tella client to take money out of the accounts you manage so they can pay off high interest loans? When did you last tell them to shop other RIAs to see if their portfolios were better suited to them or had better performance?You don't know what ADV-forms are, do you? Strictly too much Kool-aid.I've told people to pay off mortgages and the like, may times. However it is rare for people with substantial accounts to have large amounts of high interest loans outstanding. So this isn't an issue. Given that I prorate custody fee's against advisory services, I'm pretty much agnostic as to what people do with thier money.

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mikebutler222 wrote:Clearly you're being a salesman, and the worst sort. The sort that claims you have a monopoly on integrity....No monopoly, just more than merrill lynch.

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AllREIT wrote: mikebutler222 wrote:
That's marketing nonsense from someone who's deluded enough to think he has no conflicts with his own clients. The day you send them away with a book, telling them they don't need you, they can balance DFA portfolios themselves, I'll believe your "no conflicts" story.
I explain to people what I do, how I do it, why it works, and so forth. Again that's where service is the difference. Alot of people don't want to fuss with money, and they are ok with paying for money management.
How often do you send them elsewhere for better perfomance or lower fees? I know you haven't been in the business long, but you should have had that opportunity by now.
 
People who can manage money themselves aren't my clients.
If you're the integrity master, that's not good enough. You should be "selling" them on saving the fees they pay you.
 
Quote:
BTW, RR's have the legal obligation to disclose all conflicts of interest, do you? When did you last tella client to take money out of the accounts you manage so they can pay off high interest loans? When did you last tell them to shop other RIAs to see if their portfolios were better suited to them or had better performance?
You don't know what ADV-forms are, do you? Strictly too much Kool-aid.
Of course I do know what ADV forms are, we distribute them to everyone who hires us in a advisor capacity (and that's another thing you shouldn't lie to people about). ADVs don't tell people to look for better performance or lower fees. I'm willing to bet your ADVs don't mention to clients that the ONLY advise you can provide them is your own and that you're in no position to objectively review advisors or their track records, and that they'd need to fire you to get that objective overview.I've told people to pay off mortgages and the like, may times.
Sure you have.....
However it is rare for people with substantial accounts to have large amounts of high interest loans outstanding. So this isn't an issue.
ANY debt at ANY rate, or better investment returns or lower fees elsewhere. If you're not doing that your claims to a higher moral ground are nothing but a dishonest sales tool.
 
Given that I prorate custody fee's against advisory services, I'm pretty much agnostic as to what people do with thier money.
Why do you even charge custody fees? That's obviously a conflict of interest. If you're going to apply for sainthood the only route is hourly rates on financial planning fees. Selling advice gives you no moral advantage over the tens of thousands of other people in this industry who have the option of acting as an advisor OR an RR based on which is better for the client. In fact, being able to sell ONLY your investment advice and no one else's places you at an ethical disadvantage from where I sit.

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AllREIT wrote: mikebutler222 wrote:
Clearly you're being a salesman, and the worst sort. The sort that claims you have a monopoly on integrity....
No monopoly, just more than merrill lynch.
 
That statement alone, the unspoken assertion that ML ONLY offers RR services, proves you're on the short end of the ethical behavior stick.

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Such as? And be careful about stones and glass houses. Any sales activity with customers who know less than you do has ethical implications. However, some business models have more ethical wiggle room and possibilities for misrepresentation than others.
That about sums it up. 
If we did dual, I would want the prize to be determination of where the CFP mark gets to reside. Anyway, dualing would be kind of like the man who tried to catch his shadow. I prefer to let Joe Conrad's comment stand. I think you and I know all the reasons and implications. We could replay the thirty third martial arts scene in the movie China Dragon. We know all the moves.
I believe we both reside in the glass house. Market activity is beautiful. Being RIA gives you some great selling stories, and you get a much higher % of what the client pays.
Nothing wrong with letting the client decide.
I'm just saying, if you know anyone who is trying to make a moral virtue out of it, let them know that what goes around comes around.
The way things stand right now, I guess I see the structure of the industry as being like: suppose we both support the need to fight a war against economic ingorance. The stakes are the continued economic viability of our country (for real).
I'm out fighting on the front lines (higher costs),  ,but you are too smart to fight on the front lines.
Pretend that broker dealer, who funds the war against America's negative savings rate, does a lot of bad things and needs to change. He manufactures products and sells other manufacturers products, sometimes he is greedy.
He also does a lot of good things. Trains the next generation of planners. Spends money to go out and actually find people and drag them in and makes them save money. Persuades them to buy life insurance and personal disability insurance.
Spends money to create products. Makes long term commitments. Educates people.
Not you, some other RIA comes along and says, hey, you have a nice account. Come over here, I'll do it cheaper.
(Not cheaper than my wrap accounts at 1%, with ETFs.)
And even if you rip an account on price, it may be disingenous to cherry pick costs that are being amortized over time. At the very least, this is not moral superiority.
Some other RIA does a lot of bad things. He failed at a broker dealer, and registered with his home state and set up shop. He makes mistakes, and the first big market correction gets sued, bringing attention to his business and all the other little RIAs in the neighborhood.
Anyway, I think we just about all have the same products, it comes down to the ethics of the individual rep.
With regards to the CFP designation and Merrill Lynch rule, the prize du jour, the burden of proof is the aggressors.
 

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If you're going to apply for sainthood the only route is hourly rates on financial planning fees.
That doesn't even work.  Look at lawyers who pad their billable hours.  The bottom line is that mode of compensation does not make one more or less ethical.  Ethical people do ethical things regardless of mode of compensation.

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AllREIT wrote: BondGuy wrote:
AllREIT wrote: joedabrkr wrote: AllREIT wrote:The "merrill lynch rule" is the RIA's sardine key.Nice analogy.I am a mere IAR, not my own "RIA".  Yet, for clients who get the distinction, they have been most happy to convert to a fiduciary "platform".It is really powerful. See http://www.tdainstitutional.com/advisoreducation/index.htmFor some idea's on using your sardine key to best effect.Most people just don't know about how traditional B/D's and RR works. A simple "Is your trusted advisor really a salesman in disguise?" theme works wonders. The traditional A-share model doesn't stand up to scrutiny.
You keep bringing up the A-share thing. Yet you call yourself AllREIT. Something doesn't add up here? So, is that AllREIT Allthetime?
Bondguy You are grasping at straws.
I'm AllREIT because back when I starting out, I ate very little but sardine's so as to save money for my REIT portfolio, the income from that portfolio ment I could build my book the right way. If I had to do it over again, I would have spent more on breath mints.
Showing your personal brokerage statement, really builds trust. "I  own it myself."As for REIT's, most of my accounts are in a DFA type portfolio built with ETF's. I include some REITs to goose up the fixed income portion of the portfolio.
Quote:You ask probing questions about if the prospect has ever felt that their broker sold them something. If they say yes, you break out the sardine key and start turning.
And you ask probing questions why? To figure out which REIT best suits their needs? Or yours?
Sorry Bud, but for someone on the high horse against a segment of our profession your screen name doesn't say much for you.
As an RIA, how could any investment "suit my needs"? I don't get paid to sell investments. All I have to do to to wedge a client from a B/D is find out if they have the littlest crumb of discontent, and then you start working on that. Revealing to people how the B/D system works and merrill lynch rule can get clients to positivly hate their stockbroker. They feel lied to and deceived. After all, if you are a financial advisor why don't you offer advisory accounts?
You are so far out there it's funny. Are you really Sam Waterston? I really liked you in Capricorn One. That one's kinda iffy now though since your costar was OJ. Gotta tell ya, the Law and Order thing-gettin kinda old.

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Ethical people do ethical things regardless of mode of compensation.
The growth of RIA is a competitive economic activity.
The move to revoke the CFP from registered representives is an economic activity by a self-interested group.  
We keep score by seeing what develops in the CFP licensing debate.

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planrcoach wrote:
Ethical people do ethical things regardless of mode of compensation.
The growth of RIA is a competitive economic activity.
The move to revoke the CFP from registered representives is an economic activity by a self-interested group.  
We keep score by seeing what develops in the CFP licensing debate.

Pcoach, you've hit it squarely on the head. Well said.

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Pcoach, you've hit it squarely on the head. Well said.
In the spirit of recognizing the breadth and depth of broker dealer affiliation, we're lucky to have your experience and insights.

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planrcoach wrote:Ethical people do ethical things regardless of mode of compensation.
The growth of RIA is a competitive economic activity.
The move to revoke the CFP from registered representives is an economic activity by a self-interested group.  
We keep score by seeing what develops in the CFP licensing debate.

Most RIA's aren't CFP's though. The anti B/D CFP's are a diverse lot,
and I think they will win because these are the people who care about
the designation.

While you planr, do care. Most B/D CFP's think of it as badge to wear
for marketing purposes and so they won't be involved in the internal
politics of the professional society.

The growth of RIA's has everything to do with the fact that its more
profitable for the RIA and yet cheaper for the client. If you are
already  independant or a franchisee, you should really think
about making the jump. Contact Fidelity or Ameritrade RIA services and
they would be happy to help you with the process.

It's alot more fun being on the same side of the table as the client, and you get a nifty gold plated sardine key too.

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AllREIT, I have to say, this entire thread is the biggest crock of @#$% I
have ever seen. I have said this in so many threads, but it does NOT
matter what your mode of compensation. Anyone can have a conflict of
interest. B/D channels have just as much opportunity to be ethical or
unethical as RIA's. The fact, which you previously stated, that you
basically bash other channels to your clients is proof that you have a
conflict of interest. You are trying to win the business. And that is fine.
But you can't then claim that you are completely independant. You are
selling a service, bottom line. You're a salesman. Anyone in business
(any business) is. That in itself is a conflict of interest. Not unethical.
Now, I am certain that there are some RIA's (oh, nobody WE know) that
push the envelope as far as what they tell clients in order to gain
business. But again, that is because THEY are unethical, not their entire
channel.

I have nothing against RIA's at all. I think it's a great business model. It
just competes against B/D's. That's fine. It's like Red Sox-Yankees. You
can argue about it all day long. You just can't write off an entire industry
as unethical simply because it exists. I can tell you, I explain to every
client exactly how we work. I don't always explain the advisory-fee
model, because frankly, not many exist near me that compete (we have
many B/D offices in my area which are the majority of the competition).
But I explain all the different ways we can get paid, the pros and cons,
etc. And if someone wants a C-share, they get it, if they want a B-share,
they get it (rarely). I explain how I get paid on bonds, stocks, CD's, etc.
People appreciate the honesty. And nobody can really poke holes in it,
since we had the conversation up front. I have actually had several clients
come over that were tired of paying an advisory fee every year for what
they describe as an "absence" of service. Can't get call backs, nothing has
ever been done with their accounts (not even when their portfolio was
getting pummeled during '00-'02 ), etc.

I think we all have the opportunity to be ethical, regardless of channel.
But too many years of sensational headlines and slick "wall street" movies
have soured people on the industry.

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The growth of RIA's has everything to do with the fact that its more profitable for the RIA and yet cheaper for the client. If you are already  independant or a franchisee, you should really think about making the jump. Contact Fidelity or Ameritrade RIA services and they would be happy to help you with the process.It's alot more fun being on the same side of the table as the client, and you get a nifty gold plated sardine key too.
I did check into Fidelity RIA. I run a very clean book, it would be easy. My income would not decrease.
A few concerns: mainly, liability. Some client sues me in the next down market. Given my track record, this is unlikely. But we do deal with the general public. I feel the broker dealer provides an extra layer, albeit at a big price.
Also: confusing for clients, no branding, disruption of golfing time.
Having chosen to embrace the platform, I agree entirely with these comments of 24. I hear what you are saying, RIA is more fun and profitable. I'm sure we could all have a few laughs over a good game of golf.
Competitive forces: to make a change is to embrace something new and give up something old. I thrive on change. But I like to think that the broker dealer industry will fight back, by reducing costs and in other ways. For example, the truely affluent to associate and benefit from the broker dealer platform. Ironically, I think the mass affluent do too, because of the extra layers of regulation and ultimately liability protection for me, in the sense that I stay in business.
I guess I am getting conservative in my old age.
Also, frankly, I am fascinated with this ethics question. We all know the numbers, the trends, the potential results and so on. To the extent that broker dealers can evolve a bit, the current disparities between the platforms will diminish. Since this a market function, I am confident that will happen.
I think you are very generous with your honest viewpoint and you obviously helped drive a very fruitful discussion here.
 

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AllREIT wrote: It's alot more fun being on the same side of the table as the client, and you get a nifty gold plated sardine key too.
I hate to burst your bubble, but you're not on the same side of the table, you have to defend YOUR performance or the client walks. I'm on the same side of the table as the client as we (the client and I) can conduct a conflict-free review your performance against hundreds of other RIAs and hire or fire you based solely on objective criteria. Doesn't affect my fee one tiny bit.
Close, but no cigar…..

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