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The RR roundtable participants are: Richard G. Cohen, CIMA, is a first vice president investments and senior investment management consultant at Salomon Smith Barney's Westwood office in Los Angeles, where he also serves as producing assistant branch manager. Cohen is a CPA and was formerly a tax specialist with Deloitte & Touche before becoming a broker nine years ago. He holds the personal financial

The RR roundtable participants are:

, CIMA, is a first vice president — investments and senior investment management consultant at Salomon Smith Barney's Westwood office in Los Angeles, where he also serves as producing assistant branch manager. Cohen is a CPA and was formerly a tax specialist with Deloitte & Touche before becoming a broker nine years ago. He holds the personal financial specialist (PFS) designation from the American Institute of Certified Public Accountants. A major portion (about $50 million) of his book is placed with outside managers.

is a vice president at Carter Financial Management, an office of Raymond James Financial Services in Dallas. He is a nine-year veteran and holds the CFP, CFA, CLU and AIMC (an earlier version of the CIMC) designations. McIntire has about $45 million in assets under control, about 70% of it fee-based. He is also chairman of the Dallas chapter of the FPA.

RR: What are the advantages of having professional designations?

Cohen: I think it's important that if we hold ourselves out as experts to our clients, and we're going to take responsibility for guiding their lives and assuring their financial security, it seems to me we have a responsibility to bring to bear every bit of talent, intellect and knowledge we can. As you gain the knowledge, you gain the respect of your peers and your colleagues. You meet people who are knowledgeable — estate planning attorneys and other CPAs. And they become more comfortable in referring clients to you.

Martin: The public needs to know who is a professional and who is not. Credentials give them some guidelines. I think we're just beginning to educate the public as to what these credentials mean.

RR: Is a planning designation the place to start for most brokers?

McIntire: I think the CFP will soon become the minimum standard of working in our business. But other designations go a long way toward completing one's knowledge.

Martin: I don't think of the CFP as a minimum, but I do feel it should be looked at as a requirement. We are all licensed and regulated. However, the industry is beginning to recognize that the public needs to be able to recognize a professional. They need to know who has been educated in a set body of knowledge, adheres to ethical standards and professional conduct, and completes continuing education. This movement toward designations is still very much in its infancy.

I became a financial planner in a major firm as a second career. I went very quickly to the CFP designation because it offered the best route I could go without returning full time to college. Merrill provides specialists in many areas, including insurance, trusts, finance, managed money, etc., so I don't feel I need additional certifications.

Cohen: I do think the CFP designation is a very valuable designation. It certainly has good recognition. I am a CPA PFS. It actually is fairly similar to the CFP designation, because the areas that must be mastered are similar — the planning process, the personal income tax planning, risk management, insurance planning, investment planning, retirement planning and estate planning. It's really important to have not just a passing knowledge, but a real level of expertise in these areas as well. It's the only way you can give good overall advice.

RR: Do people see your CFP certificate on the wall and say, “Thank goodness, you're a CFP. Now I'm comfortable.”

Martin: No. I haven't seen that.

McIntire: I have quite a few times. Not the majority of people. But it's just one of many factors they use to evaluate me and the relationship.

Cohen: My qualifications are listed on my Web site. I've recently found that as members of the public have turned to the firm's Web site to search for financial consultants, they have found their way to me and have often said they chose me because of my advanced qualifications.

Martin: Probably your CPA. They recognize it.

Cohen: I think the CIMA and PFS tend to impress people who are estate planning attorneys, tax attorneys and others who are clued into these things.

McIntire: Speaking from the independent adviser's viewpoint, we have an extra hurdle to surmount in marketing. We don't have the name recognition of Salomon Smith Barney or Merrill Lynch, and our own personal qualifications and designations have probably become more important.

RR: Tom, you are the one CLU here. How does that compare to the CFP?

McIntire: Well, I've found the CLU to be very easy to acquire because I was a CFP first, and I didn't have to take all the exams that someone starting from scratch would have to take.

I exempted out of about half of the exam. And I already had the CFA and the CFP studies behind me. The CLU program is also easier than the CFP because the CLU exams are independent of one another, and exam questions come mostly from the reading materials. The CFP comprehensive exam requires one to integrate and apply a broad body of knowledge to more complex situations in mini-case contexts.

Overall, the CLU is quite similar, with a whole lot more focus on the insurance side, which is what I wanted. It covers all types of life products, product construction and pricing, and actuarial underpinnings; health; buy/sells; group plans; deferred comp; estate planning; business types and small-business continuity issues, law, etc.

The CLU content applies to virtually all employees and business owners — they all have several types of insurance needs. So to not be familiar with this major area is to be severely handicapped as a comprehensive adviser.

RR: What if I want to handle investments rather than focus on planning?

Martin: It really depends on the type of practice you run. Although I do a lot of technical stuff; I primarily focus on the relationship and depend on others to help me run numbers. But if you wanted to do an insurance type of business, you might want a CLU only. So I think a lot of times you choose your certification based on how you want to run your practice.

Cohen: Not all financial consultants do a financial planning business. In the investment sphere, you just can't do a good job of evaluating managers or doing performance evaluation, or even asset allocation without really understanding what's behind it. In many cases, you have to use your judgment and take account of the weaknesses in the financial formulas, and that requires a sophistication that can really only be achieved through advanced education and some years of experience.

Along the lines of investment expertise, the CIMA designation, I think is a very important and valuable one. It is given by the Investment Management Consultant's Association. Their goal is to increase the professionalism of the profession, to be sure that reporting standards are up to the level the public can rely on, and also to insist on high ethical standards for its consultants.

The CIMA involves a program that's taught by professors from the Wharton Business School at the University of Pennsylvania. It's a graduate level program, and it focuses on quantitative portfolio management and risk analysis. It includes the study of things such as investment policy, asset allocation, risk management, beta coefficients, historical returns, duration and convexity, fixed income, international financial markets, measuring returns on portfolios, performance attribution, due diligence, manager selection, the regulatory environment and ethics.

The program is rigorous. I mean, you have to compute standard deviation and the like by hand for the final examination, which is a very rigorous examination. When I completed the program, I felt I had really accomplished something.

RR: What about the CFA and CIMC?

McIntire: The CFA program is a self-study program. On average, it requires about 250 hours of study per exam. The exams have to be taken sequentially within three years. The CFA encompasses what I heard Richard talking about with the CIMA, but I think the CFA has quite a bit more on technical analysis, a lot about international financial systems, pensions, off-balance sheet activity, hedging activities, currency translation effects, fixed-income derivatives, futures, swaps, mortgage-backed securities, and it just goes on and on.

We had three exams and each one was, I think, a six-hour exam. The pass rate is about 50%. About half of CFAs have a Master's or higher level of education, and the bulk of them work as portfolio managers or analysts. I found the program to be more intensive in preparation and more stressful than the CFP exams.

The goals of the two managed money trade associations (ICIMC and IMCA) and the content of their respective examinations are so similar that there will probably be a merger of the two within the year, from what I hear.

RR: If I'm a new broker, should I build a business first and then get a designation?

Martin: You have to do both.

McIntire: From my personal experience, I thought I needed to get that broad education right out of the box, so the CFP mark was the first one I felt like I had to have. Then I wanted to go deeper into the different segments, and I recognized the CFA as the one that got me where I wanted to go on the investment side.

And then insurance was the third rung for me. Of course, there's the cost and time commitment to all those things, and they factored into the order as well.

Cohen: And then there's the continuing education requirement. It is definitely an ongoing burden when one has these advanced designations. The CIMA program requires, I believe, 40 hours every two years. To some extent, there's some overlap of continuing educational requirements (between designations), but you do wind up spending at least a couple of weeks a year taking care of continuing education.

For young brokers, it's so difficult to become established that for the first year or three, they may be working hard just trying to stay alive. It would be difficult for them to do any outside activities. But once their heads are above water, I would suggest doing the CFP program. I think becoming a qualified and credentialed financial planner is the first step, because that gives you the issue-identification skills. You can do a good job for your clients and not miss things. Then I agree with Tom. The next thing is to see where your interests lay. And I think for most people, that is investment management consulting. So I think that's the next thing, the CFA, or the CIMA.

McIntire: My view was that since I wasn't going to have that big of a client basis initially, I would have more time. So I dug in right away to get the CFP as quickly as possible. I figured the more I knew, the sooner that knowledge could amplify.

Martin: You cannot get a CFP unless you've had three years experience in planning. So even if you get it earlier than that, it won't be conferred. And most firms are not going to be too excited about you working on a designation when you're not meeting goals.

RR: But you can get the knowledge base, even though you don't have the designation yet?

Martin: Yes, you can.

McIntire: That's true, because a CFA also requires an undergraduate degree and three years of experience.

RR: Where do firms fit here?

Cohen: Salomon Smith Barney encourages those who do investment management consulting to seek the CIMA designation. We have a whole educational program for this. In fact, my tuition for the program was subsidized by the firm.

Martin: Merrill has something we call a Wealth Management professional, and the training is similar to the CFP and CFA.

McIntire: Linda, hasn't Merrill Lynch required all brokers to become CFPs?

Martin: Not all existing persons, but all new hires, not necessarily transfers, but new hires coming through the training program, which is a five-year program now. At the end of the five years, they must have achieved their certification. The firm will accept the CIMA, CFA and the CLU. Most trainees will get the CFP — that's the one the firm is going to try to have everyone get.

RR: Ten or 15 years ago, most of the firms did not encourage the use of the CFP mark or others. There really has been a sea change at the firms. They've incorporated outside designations into their own training programs.

Cohen: Dan, when I was preparing for this call, I talked to some of my consulting group training people, and I learned the following: As of February, there were 1,557 CIMAs, and 235 of them were at Salomon Smith Barney; 203 at Morgan Stanley, 120 at Merrill Lynch and 112 at PaineWebber. So those numbers at the firms account for about half of all of the CIMAs.

  • Certified Financial Planner — CFP
    CFP Board of Standards (

  • Chartered Financial Analyst — CFA
    Association for Investment Management and Research (

  • Certified Investment Management Analyst — CIMA
    Investment Management Consultants Association (

  • Chartered Life Underwriter — CLU
    The American College (

  • Certified Investment Management Consultant — CIMC
    Institute for Certified Investment Management Consultants (

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