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Applied Knowledge Is Key To Business Growth
In May , a survey of nearly 400 independent financial advisors found that the overwhelming majority — more than 71 %— would like to improve their understanding of the complexities facing the growing retiree market .
“ Most advisors have a minimum of knowledge on a broad range of topics ,” says Michael Finke , PhD , CFP ®, professor of wealth management at The American College of Financial Services . “ But they aren ’ t as confident as they would like to be on certain specialized topics .”
Where advisors need the most help
The 2022 RIA Growth and Specialized Knowledge Survey conducted by The American College of Financial Services in King of Prussia , Pa ., zeroed in on exactly where financial professionals at registered investment advisor ( RIA ) firms feel they need the most help : retirement-income planning .
That topic surpassed related fields such as estate planning , advanced tax planning , and investment management as the most pressing knowledge gap that advisors would like to close .
Too often , says Finke , clients — typically , high-net worth ones — come in with complex retirement-income questions that are beyond the knowledge offered in CFP ® certification and ChFC ® programs . For instance , only 18 % of the CFP ® exam covers retirement savings and income planning .
The key to sustainability and growth
There are numerous options for getting specialized training , but , by a margin greater than two-to-one , independent advisors prefer educational programs that lead to a professional designation , as opposed to shortform training such as micro-credentialling , according to the survey .
More than 90 % of advisors say designations help advance their career , while 67 % feel that they ’ re essential to business growth .
In an environment dominated by large firms , more than 80 % of independent RIAs say knowledge from designation programs will support service integration , help build momentum , increase assets under management ( AUM ), maximize profitability , and accelerate long-term profitability and sustainability .
Harnessing the specialized expertise that ’ s needed for effectively delivering advice and guidance is key to staying competitive .
Whether fee-only or commission-based , advisors shouldn ’ t be stuck without answers to clients ’ complex questions and requirements .
A client ’ s top priority
Consumers like to see those education certifications , too . They denote a high degree of knowledge — a characteristic that clients value the most , according to the Granum Center for Financial Security ’ s 2022 Consumer Survey . Being knowledgeable even outranks being trustworthy and being available to listen and understand , in terms of which qualities consumers find important in advisors .
If having knowledge — as evidenced by professional certifications — is the single most important quality that clients look for when they seek out financial guidance , it ’ s also what advisors want and need the most to grow their practices .
Some 80 % of RIAs say their top business
priority is expansion , according to the RIA survey . Most want to hire five or fewer additional advisors over the next three years and grow their businesses organically , through slow , steady client referrals . The second priority is strategic business planning , followed by implementing new technologies for improved efficiency .
But knowledge of retirement-income strategies is the number-one hole to fill .
Getting ready for the Baby Boomers
Not surprisingly , retirement-income planning is also the area of greatest concern among clients . Since most retirees don ’ t have pensions , the necessity to make their savings last through retirement — one that may extend 30 years or longer — is more urgent than ever .
As the peak of the Baby Boom generation reaches retirement age , the need for retirement-income planning becomes even more pressing .
Clients want to know what to do with their 401 ( k ) s when they leave the workforce , whether and how to delay Social Security , how to optimize required minimum distributions ( RMDs ), and other sophisticated approaches for ensuring they have the kind of comfortable retirement they desire .
These are the issues that motivate clients to seek out a professional financial advisor in the first place . In fact , more than 31 % of consumers surveyed chose “ understanding how much I can safely spend in retirement ” as the top service they hope to find in a financial advisor . They want to make their funds last — and maybe still leave a legacy for heirs or a favorite charity .
“ Most retirement-planning education is about the different types of accounts and tax rules , but not so much about retirementincome strategies ,” Finke stresses . “ So most advisors aren ’ t adequately prepared to answer consumers ’ vital questions about retirement-income planning .”
“ Most advisors have a minimum of knowledge on a broad range of topics . But they aren ’ t as confident as they would like to be on certain specialized topics .”
— Michael Finke , PhD , CFP ®, professor of wealth management The American College of Financial Services
For these clients , it ’ s not enough to put together a solid investment portfolio . Fashioning a customized retirement-income plan will yield needed results because it makes sure that all aspects of a client ’ s financial life are in sync . That level of expertise takes extra know-how and training .
If advisors haven ’ t been educated in how to create a reasonable , realistic , well-balanced retirement-income plan , they ’ re not going to be able to provide the single most valued service their clients are searching for .
How The College can help
The Retirement Income Certified Professional ® ( RICP ®) designation from The American College of Financial Services is built by top industry experts and empowers financial professionals with the extensive and intensive knowledge they need to become experts in today ’ s fast-growing retirementplanning market .
Knowledge could be the most vital differentiator for successful practices in the future . To learn more , visit TheAmericanCollege . edu .