Minimum Requirements

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Nov 21, 2007 6:17 pm

Folks like to joke about Jones's regular hiring of ex-car salesmen, but a big part of that is true.


I just met a new FA who has spent the past ten years selling tractors. He has nothing more than a high school diploma, but he's passed the 7 and 66 and is now permitted to present himself as a bona fide financial advisor. 
 
The attorneys and CPAs around here know his background and won't give him a minute of their time, because they're aware of his lack of real credentials; he's simply passed what they view to be a few easy exams--especially compared to what they've taken.

Although I'll never contend that a person without a college degree is less intelligent than a person with a degree, I will say that we'll never be viewed in the same light as attorneys, doctors, CPAs, etc.--or become well-respected by this group of professionals--until we establish some minimum education requirements that must be met prior to joining the industry.


What do you guys think?
 
Nov 21, 2007 8:07 pm

Amen!

I know a lot of FA's WITH a college degree, who are no more qualified to give Financial Advice, than the New York Jets (my team, i can say it) is qualified to go to the Super Bowl.
 
However, seems to me that  4 year college degree should be a minimum requirement to get an interview. I dont think any Branch Manager who would hire or even spend time interviewing someone without a college degree, has respect for the profession - in fact, by doing so, they lose their right to refer to their FA's as "professionals"
 
I'm sure this thread will draw some interesting responses.
Nov 21, 2007 9:16 pm

I think there's a difference between "scholastic" education and training through MENTORSHIP.

 
First disclosure:  I am NOT a college graduate.  I do not have a BA, AA or anything else.
 
My first 3 years in this industry have been under MENTORS who do financial advising and planning very well.  I have learned from them while taking and passing 7 out of 8 of the ChFC courses (1 left to go!), joined NAIFA and Society of Financial Service Professionals and reading the Wall Street Journal.
 
The guy you mention selling tractors for 10 years... he has a "label".  He will forever be identified as the "tractor-guy". 
 
If he did JOINT FIELD WORK with an experienced mentor for a couple of years and had the MENTOR introduce him to the attorneys he works with, I think it would be a completely different story.
 
He will also need to be very humble when talking to those attorneys by saying and admitting that he's new to this industry, BUT that he works with an experienced mentor to help him design and work with his client's cases.
Nov 21, 2007 9:58 pm

You make a great point, Skippy.


I'm sure there are a thousand different ways to learn how to do this job effectively.  There is no doubt in my mind that there are tens of thousands of top producers who don't have college degrees and have learned how to do this job very, very well through the guidance of mentors, etc.
 
I'm just suggesting that we need to have minimum entrance standards in place in order to command the respect we desire.
 
Again, I don't think a degree makes a person smarter, but since I've "been there, done that," I have a higher level of respect for a person who has finished college because I know that they have accomplished a goal that most folks will not--and I know that other professionals consider a degree to be a "rite of passage" also.
 
I don't consider a person who sells home, auto and life insurance to be a professional by any means, and a lot of folks look at us the same way since there are no minimum qualifications in place to enter this industry.
Nov 21, 2007 10:49 pm
pratoman:

Amen!

I know a lot of FA's WITH a college degree, who are no more qualified to give Financial Advice, than the New York Jets (my team, i can say it) is qualified to go to the Super Bowl.
 
However, seems to me that  4 year college degree should be a minimum requirement to get an interview. I dont think any Branch Manager who would hire or even spend time interviewing someone without a college degree, has respect for the profession - in fact, by doing so, they lose their right to refer to their FA's as "professionals"
 
I'm sure this thread will draw some interesting responses.
 

I THINK THAT GUY WILL OUTPRODUCE ALL OF YOU THAT AGREE WITH SUCH ELITIST CRAP!


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I’ve seen cases from people with MBA’s that's the worst kind of crap beyond my imagination. There are far more MBA’s in this game than the guy you describe and what rep. does this business have?



The fact that you would post such about another speaks much more about you than him.



I’ll bet you find the idea that there are far more plumbers making over $100K than physicians unacceptable … sigh.


I feel sorry for you and I wish you the best.
Nov 21, 2007 10:55 pm

Sorry Prato I meant to quote Borker Boy.


Been a long blurry day.


I'll bet the tractor guy is juist getting home as well.

Nov 21, 2007 11:06 pm
Borker Boy:

I'm just suggesting that we need to have minimum entrance standards in place in order to command the respect we desire.


Again, I don't think a degree makes a person smarter, but since I've "been there, done that," I have a higher level of respect for a person who has finished college because I know that they have accomplished a goal that most folks will not--and I know that other professionals consider a degree to be a "rite of passage" also.
 
Well, let's brainstorm on this for a moment.
 
The first thing I think about is the fact that the LICENSING process is basically an IQ test.  It's a joke.  Can someone listen well in a class or read a book well enough to answer some questions on an exam?  That's the system we have.  Once you pass, you forget everything the next day.  Score too high?  Probably a sign that you should be an analyst and not in sales.
 
I don't remember any training on retirement plans, income taxation, estate planning or other strategies in the licensing process.  Basically, THE CURRENT LICENSING PROCESS IS TOO EASY - THEREFORE IT'S TOO EASY FOR CERTAIN FIRMS TO HIRE IN QUANTITY INSTEAD OF QUALITY.
 
Perhaps the Series 65/66 licensing process needs to be more stringent and broad in content.  My guess is that you might like what the CFP board would like - make the CFP or equivalent coursework completion a requirement before entering the industry to advise the public.  (Of course, the CFP Board now requires a 4-year degree before being eligible to have the CFP designation.)
 
This would:
1)  Raise the bar
2)  Weed out other people who don't have the time, talent or disposition to take the courses
3)  Slow the recruiting process (good and bad)
4)  Lower the amount of "client experiments gone bad"
 
I, myself, didn't leave my training to chance with my current firm.  This was why I chose to enroll in the ChFC cirriculum of The American College.  But I also know that I'm only 1 out of a few hundred that might even bother with such coursework during their first few years in this business.
 
If going into this line of thinking, the next question is:  What is the reputation of those who hold the CFP credential?  Does that help or hinder us?
 
We know that the FIRM ITSELF doesn't matter.
We know that the PRINCIPAL of the firm only checks for "suitability".
We know that the public has NO IDEA about credentials (except for CPA).
We know that the public can't recognize good advice from bad advice thanks to people like Orman, Bach, Clark, etc.
 
So, how do YOU show credibility?  I show it by listening to my clients, understanding their situation and mindset, make recommendations that they're comfortable with and monitor the plan as we move forward.  This is how I move large accounts from other advisors who have great degrees and designations, but they may talk over people's heads.
 
It's more about PSYCHOLOGY than TECHNICAL knowledge.  You gotta have technical knowledge, but you can always look things up, contact a specialist, etc.
 
You gotta get into people's minds that you are a professional that cares and understands people.  You gotta speak in common-sense terms and leave out the hype.  Don't have an over-inflated ego.  Put yourself down SO THAT OTHERS CAN BE RIGHT!
 
I guess the problem is that you can be a poor advisor, but a great listener and still do well (income wise) in this industry.  Then you meet an attorney or CPA and they realize that you just make a whole lot of money (that they WISH they made) and you don't have near the technical expertise that their jobs require.
Nov 21, 2007 11:17 pm
pratoman:

Amen!

I know a lot of FA's WITH a college degree, who are no more qualified to give Financial Advice, than the New York Jets (my team, i can say it) is qualified to go to the Super Bowl.
 
However, seems to me that  4 year college degree should be a minimum requirement to get an interview. I dont think any Branch Manager who would hire or even spend time interviewing someone without a college degree, has respect for the profession - in fact, by doing so, they lose their right to refer to their FA's as "professionals"
 
I'm sure this thread will draw some interesting responses.



Oh stop picking on Tractor Guy....you sound like one of them there failed planners....

Nov 22, 2007 8:01 am

How 'bout this: start over with 1930's regulation. Simplify to this: you cannot call yourself an ADVISOR unless you are a fiduciary. If it is only about "suitability", then you cannot have ADVISOR on your biz card.

 
Firms would have a legal incentive to have the ADVISORS be the best field force, while everyone else would be an RR.
 
Only ADVISORS can do anything discretionary.
 
Then the industry can market this because it is less confusing: if you want PLANNING and not TRADING the hire a fiduciary (ADVISOR).
Nov 22, 2007 10:33 pm
newnew:

How 'bout this: start over with 1930's regulation. Simplify to this: you cannot call yourself an ADVISOR unless you are a fiduciary. If it is only about "suitability", then you cannot have ADVISOR on your biz card.

 
Firms would have a legal incentive to have the ADVISORS be the best field force, while everyone else would be an RR.
 
Only ADVISORS can do anything discretionary.
 
Then the industry can market this because it is less confusing: if you want PLANNING and not TRADING the hire a fiduciary (ADVISOR).
 
Probably not a bad idea at its core.
The reality is, at least in the wirehouses, that we are encouraged to offer "holistic planning services" and get deep with our clients, become their "family CFO". At the same time, we cant be fiduciaries, blah blah blah. The whole thing is full of conflicts.
 
To stay on topic, I guess there are two camps: those who sell product, and those who sell advice. Those who sell product, are concerned about selling, period. Nothing wrong with that. Those who sell advice, will only succeed (IMHO) if they can market themselves as professionals. I just dont see how you can do that without a college degree. I'm not saying that non college grads are not as smart, I'm just saying that in our world PERCEPTION IS REALITY, whether we like it or not.
Call it elitist if you want, I call it realistic.
No disrespect meant to Tractor Guy, or any other non grads trying to make an honest living giving financial advice to the public.
Nov 23, 2007 11:04 am

this industry is a mess. half the people in it cannot define the difference b/t "fee-only/fee-based/fee-in-lieu/RIA/AIR/fiduciary/wrap/SMA/MAP/UMA/advisory account" -- how can the industry market itself on a higher ("non-product-peddler") level with such total confusion? needs regulation written in the current century--will NOT regulate itself because the firms want to be your family's CFO but WITHOUT a solid legal threshold of advice.

Nov 23, 2007 5:56 pm

I've been in this business 15 years now!  I've seen college grads with MBA's (Which I have one) who couldn't wipe there own butt (according to their mentors).  I was at Jones 14 years and I recrutied 17 people in those years.  Three did not have a degree and they are all doing well in this business.  Fifty percent of the rest have left the business.

 
The tractor salesman must live near farms.  I would bet that he could go out on farms and talk turkey with the farmers and gain their trust.  Let him get under the equipment and turn a wrench with one and he has a client for life.
 
Another thing this tractor salesman has--is life experience.  You can hire a FA with no life experience but college and you get a koolaid drinking know nothing about sales or Financial Advice.
 
It takes years of experience to be a good at this--some learn fast.  As a branch manager which I am--I would ask about your education and that does give you some points.  But I would ask about sales experience, other studies, and recommendations.  Is this person going to rip off his or her clients?  Remember, there are people with MBA's who are ripping off old clients!
 
Borker Boy and Pratoman--did you know that 27% of all officers in the Navy receive direct commissions as officers--most DO NOT have college degrees...99% of those officers serve 20 or more years and are the best officers.  Their sailors will follow them into any battle.
Many college graduates go on to be great officers too---but sailors respect those who come from their ranks...so what does this have to do with being a good financial advisor?  It means clients respect gray hair and life lessons.  I think you will find that the best FA's in our industry came from other walks of life and many of them did not come here with a degree--but got it later.
 
All that degree says is that you have the ability to complete a very long project and can find reference material.
 
By the way, I never graduated from High School--I only went to the 8th grade!  Today I have a MBA and I have taught evening business college classes for several years.  I got a High School GED at age 28.  What I bring to the table is empathy for that mechanic that just got laid off and has to rollover his 401k plan.  Why, because my first 6 years in the Navy I was a mechanic too--oil and grease all over you with the smell of fuel you can never get out of your skin.
 
I think Gaddock was a little tough on you about that elitist crap--but his thoughts were right on.  If you are a good Financial Advisor--that's great.  But don't let that class ring on your finger make you think you are a better FA than the other guy/gal just because they don't have a degree. 
 
Have a great weekend everyone!
Nov 23, 2007 7:12 pm

Roadhard - 

First of all, I sent you a PM, on another subject, so check your inbox when you get a moment.
Regarding your post:
I dont disagree with most of what you are saying. Life experience trumps all, most of the time. And as I think I said in my post, i've seen plenty of College Grads, who have been really bad FA's not just from the perspective of production level, but most important, from the perspective of doing right by clients. And as a manager, which I am as well, I look for sales experience, as well as life experience.
 
But I think there are a few different conversations going on within this thread, One is whether or not a degree is a pre-requisite for being a good FA, at one level or another, and to that point, I agree with you that the answer is not necessarily.
 
The other conversation, and what I am referring to, is the fact that we try to present ourselves as professionals, We tell prospects things like "i get paid a fee for my advice, just as your attorney does", or just as a doctor gets paid whether he cures you or not, I get paid for advice, not for what the market does", etc, etc. So we are comparing ourselves to proessionals, which by definition means we claim to BE professionals. And since PERCEPTION IS REALITY, in our industry, I dont see how someone without a college degree would be considered a professional, IN THE EYES OF A PROSPECT OR CLIENT or a center of influence.
 
I am ONLY talking about the perception of our industry by the public. Thats it. Nothing to do with being a good advisor. It may not seem just, but its the reality we deal with every day, as we netowrk with CPA's , Estate and Trust Attorneys, and other centers of influence.
 
JMHO.
Nov 23, 2007 11:17 pm

I'll not argue with a thing you said, Roadhard. I, too, vehemently agree that a degee is NO INDICATION OF A WHETHER A PERSON WILL BE SUCCESSFUL IN THIS INDUSTRY. Unfortunately, your passionate dissertation fell on deaf ears, since that's not even the issue we're discussing.


Thanks, pratoman, for getting us back on topic. You understand that this thread has nothing to do with what those of us in this industry think about each other.
 
 
 
Nov 24, 2007 2:26 am

I have to pipe in here.

Regarding whether a college degree should be a requisite for a professional title such as CFP.

I have to side with those that agree that this should be the case. I am also one of those that went to school a bit later in life. At 33 I went back to college and began the tough road of student life which in my case included a wife and five kids. This was a tough decision to make, but one that I felt was necessary. I had worked for several different companies in several sectors. I had run several businesses of which some were miserable failures and others were adequate successes.

I knew that I had the potential to fly so to speak, but I also was aware that there were holes in my knowledge base that my 15 years of work and life experience at that time had not filled. Initially the transition was harder than I thought it would be. Not because of the course curriculum, but because of how set in my ways I had become regarding the how to's in various aspects of business.

I had to eat humble pie on more than one occasion when dealing with the matierals. Learning is organic, and any business school worth their salt do their best to keep abreast of new theories, models, applied concepts, etc.

Having gone through that fire, I can say it has made a world of difference. Not replacing my experience, but revealing to me what my experience has taught me, as well as learning new things that would allow me to become a more dynamic resource in business regardless of where I might end up career wise.

A degree is a must for one to be considered a professional. I do offer a caveat to that statement. Not all schools are created equal. I think that a degree is only worth the value of the education received combined with the individual abilities of those who received said education. With that in mind, I think that the certification for CFP or any other professional designation should be a combination of factors:

College Degree from accredited school, preferably a graduate degree. A minimum of five years work experience, preferably career associated (running your own business with proof of revenues generated during that time, management, executive and the like). Passing the applicable exams.
Finally clearing a comprehensive background check.
As much as work experience can teach you many things, an academic environment makes all the difference in the world. I never thought it would have as much an effect on me as it did, but it really did.
Nov 24, 2007 10:28 am

I can see that all of you believe in your position--that I respect!  But in the end there are several things that really matter in this business as a branch manager:

 
1.  Gathering Clients
2.  Taking care of those clients
3.  Profitabilty
4.  Production
5.  Complaints
6.  Compliance
 
Some of you are in large cities and some of us are in rural farming communities.  I really believe that tractor salesman would do well in his environment.  If he is at Edward Jones he would be in a one person office in a rural area (Maybe).  The CPA's and Lawyers he works with might even own a farm operation too.  It is just a different mindset. 
 
I do work with a very large estate attorney and I have received some very hugh referrals from him--not once did he ever ask me what college or school I attended.  He started working with me when I called him in advance of our client's death and recommended we sell losses in his account to keep from losing those losses on his death.  That impressed him--not my degree.
 
Now I understand where all of you are comming from as to having a basic requirement to qualify to work in this business...Why not require no DUI's, a FICO score of 600 or better,
a much harder series 7 or 66 test (one where only 50% or less pass the first time) and they can only take that test twice in any 5 year period to pass.  That would clean up our industry.   Like I said, I respect your position and making the requirement to have a degree to get into the business in the future might help with the cleanup--but I think some of those million dollar producing 30 year vets just might not see it your way.
 
Have a great weekend folks!  Monday's around the bend!
 
 
Nov 24, 2007 11:56 am

I have the utmost respect for anyone who builds a successful practice in our industry, while taking proper care of their clients, whether that person has a degree or not. It is a hard business to build, and anyone who can meet the challenge is focused, disciplined and reasonably intelligent. Nuff said on that!

 
The CFP is a different issue. I agree with the board that a college degree should be a requirement. This points to their effort to market the CFP designation as a professional designation, which is the whole point of this discussion I guess.
 
I also like Roadhards suggestions on making the s7 more difficult, etc.
 
My firm has a managed money platform where the portfolio manager is teh FA. In order to utilize that platform and obtain the Portfolio Manager (internal designation), I had to do self study and take an exam which, unlike some of the other internal designation exams, is really no joke. It was effectively the exam on the Investment Planning module of the CFP exam. It would be a great idea to incorporate something like that into the S7.
Nov 26, 2007 3:16 pm

To start: I have a masters degree in a non-related field and in NO WAY consider this to be a qualification for this industry. Like anyone involved, my entry has been through mentorship, informal training and licensing. I have learned quite a bit from two individuals, one in his mid-30s who still has courswork to complete and the other has over ten years of experience as well but no degree.

 
I actually find it detrimental to the industry to have people hold out to the public degrees which have no relevance to the field as if this were not the case. MBA and JD holders are the biggest culprits here.  Were your management courses finance related or are you similar to one MBA-client who asked me what a hedge fund is? Are you actually GIVING legal advice? 
 
I am in favor of making a rep's background (including education, financial disclosures and arbitrations) fully available to the public in an easily accessed format. Let the client decide if the credentials warrant business.
Nov 26, 2007 3:41 pm

xbanker - while I agree that a degree in something other than finance or economics doesn't lead to someone walking in with qualifications, I don't think that's the whole story. What makes people truly qualified is: 1 - How well do you think & what is your process? Advanced schooling gives people a better chance at learning critical thinking skills. 2 - How well do you keep up with current topics? Continuing education & skill refinement I think is critical as our clients needs change quickly as does the world & markets we live in.

Nov 26, 2007 10:01 pm
xbanker:

To start: I have a masters degree in a non-related field and in NO WAY consider this to be a qualification for this industry.

 
Agreed.  Those of you who think that years of academia give you a leg up in this industry are just kidding yourselves. You MAY get a leg up in credibility from SOME prospects, but unless your studies are fairly closely related to what you'll be doing, they are of little value to you in this field.
 
xbanker:

I am in favor of making a rep's background (including education, financial disclosures and arbitrations) fully available to the public in an easily accessed format. Let the client decide if the credentials warrant business.


 
Now THERE'S an idea.  The sad thing is, even if that were the case, most clients wouldn't bother.  Maybe we should hand them out with the account opening documentation and tell our clients and prospects that advisors who don't disclose credentials and education, fail to for good reason...
 
Count me among those who believe that the pathetically low entry barriers are the reason for the high failure rate in this industry.  However, if we are going to require more education, let's at least make it relevant.