Professional designations that add to financial advisors' expertise could boost client services and their businesses. But first advisors must choose among hundreds of possible marks.
Out of the dizzying mix of acronyms after advisors' names that reflect career advancement alongside a recruiting competition among industry certification organizations, the certified investment management analyst, certified private wealth advisor and retirement management advisor designations present a compelling connection with key business metrics. On average, advisors with one of those three designations manage higher assets under management and generate more income than peers without the marks,
The findings reflect how the profession has shifted since 1997 — the first year in the industry for Sean Walters,
"If you're going to be that sole practitioner, that family practitioner, then you have to know practically everything," Walters said. "The numbers are pronounced in the difference they make in the overall metrics. It's a validation that team-based approaches generate results."
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Alphabet soup
A
However, IWI has built a sizable membership base of its own with about 21,000 professionals, including 9,000 CIMAs, 4,000 CPWAs and 400 RMAs, Walters noted. The list of
At the basic level, the higher compensation and assets under management display the simple fact that many CFPs elect to pursue another certification — whether through IWI or another organization like The American College of Financial Services. As a coach to many aspiring and growth-minded advisors, Henderson said CFPs trying to expand their clients or services go after IWI's certifications or similar ones like the College's retirement income certified professional.
"Most successful people, including successful advisors, are going to pursue more knowledge. I would gather that people who have already been successful in the industry by other standards will probably pursue this type of certification," Henderson said. "If they're trying to say, 'I want to pivot from them and/or find a totally different demographic to serve,' I'm seeing more people up their knowledge for that specific group with things like the CPWA."
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Survey says
The study by IWI and CEG polled 1,093 advisors, with 580 that didn't have any of the three IWI certifications and 513 that have one or more. Those with the certifications manage an average of $267 million more in team AUM than peers without the marks and generate mean annual income that is 33% above those that don't have them.
In terms of AUM, the teams of advisors without the certification managed $392.8 million, compared to $659.5 million for those with the CIMA designation, $483.2 million for CPWAs, $500.7 million for RMAs and $612.8 million among the teams led by advisors with all three designations.
Only 6.7% of advisors without any of the IWI certifications have "reached what we call the 'elite' level in the hierarchy of advisor success" with at least $1 million in annual net income, while 12% of CIMAs, 11.2% of CPWAs and 13% of RMAs have done so, the study said. The marks "help drive results by empowering advisors to deliver a superior client experience — especially in comparison to those advisors without certifications or with only the CFP designation," according to an article in the January/February issue of IWI's journal on the study.
"Advisors today must position themselves in ways that make them stand out in a crowded marketplace, and they must deliver greater value to clients in order to demonstrate that their positioning is more than merely lip service," the authors, George Walper of CEG Insights and John Bowen, CEO of advisor coaching firm CEG Worldwide, the research company's parent, wrote in the article. "Advanced certifications have emerged as critical tools in this effort, providing both the technical expertise and professional credibility that advisors need to attract, serve and retain ideal clients."
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The upshot
Advisors and other professionals trying to figure out which certification may fit them best should start by thinking about "the practice model and the practice strategy," according to Walters. For example, those interested in gaining more technical knowledge
"Advisors are adding services, but they're also adding fees for those services, and it's not just a single AUM fee," Walters said.
Regardless of which certifications they seek, advisors must "do your due diligence and do your research" to figure out if the cost of training is worth it and understand that the letters behind their names provide much more "recognition and visibility inside the industry" than among the public, Henderson said. Outside of the need to obtain the required licenses and registrations, advisors' business models, experience and "soft skills in the client relationship" enhance service and business results more than the mere fact that they have a professional acronym, he said.
"Designations and certifications, by and large, are for us — meaning industry participants," Henderson said. "They're not for the investing public."
