If they choose to do so, financial advisors can gather a long list of accreditations and certifications to prove their worth and knowledge in the field of investment and financial planning. But when attorneys and accountants look for an advisor to work with their clients, do they immediately check an advisor’s certifications to ensure that the person they are referring their clients to is reliable and knowledgeable?
According to Spectrem’s recent research, Gatekeepers: Their Influence on Referrals and Wealth Transfer, the answer is “yes”, and “not so much”.
When attorneys and accountants have clients in need of expert investment assistance, they often have a list of advisors with whom they have a prior relationship. This list includes those they have trusted with clients in the past, or have had some other type of working relationship with that has worked well enough to want to continue a mutually beneficial coexistence.
Those professionals who make referrals to advisors in order to assist their own clients with their financial and investment needs act as Gatekeepers, protecting their clients from poor or unscrupulous advisors. But the Gatekeepers who do not have a ready list of advisors from which to choose must create a checklist of qualities they want in the advisor they will eventually work with.
Is advisor designations on that list?
The designations advisors can acquire are many, and they include CFA (Chartered Financial Analyst), CFP (Certified Financial Planner) and CIMA (Certified Investment Management Analyst). While the Gatekeepers view the designations as proof of expertise and training in the field of financial management, they are not proof of honesty, trustworthiness, or attitudes towards clientele.
“It’s not as important to me,’’ said one Gatekeeper. “I don’t care about that stuff.”
The Gatekeepers are merely making recommendations, and often recommend more than one advisor, allowing their client to choose. The professional designations serve as a way to indicate to the Gatekeeper’s client that the advisor being recommended has done his homework.
“People are impressed with designations even though many of (the clients) don’t really know what that means,’’ said one attorney.
Investors say they care about advisor designations, just as they say they care whether their advisor is a fiduciary. According to Spectrem research, 75 percent of Millionaire investors say it is important to them that their advisor have professional registrations or licenses.
Often, however, investors are unaware how difficult, or simple, it is for advisors to get their designations. The CFA, for instance, is difficult to attain initially and requires continued education to maintain.
Occasionally, the Gatekeepers are also unaware of the significance of the designations as well.
“I guess we should be a little bit skeptical,’’ said one accountant. “I don’t think the designation is anything but a formality. It’s good to have that formality and plenty of people have a designation but don’t seem to know how anything works.”
The other criteria Gatekeepers use to determine whether they are going to refer a financial advisor include fiduciary status, the size of the advisor’s firm (in relation to what the client would be comfortable with), and personality, of course.
“I always consider personality, because all of my clients have different personalities, as do I,’’ one attorney said. “If the client is more sarcastic, I try to match them with somebody who is more sarcastic. If they are straightforward, and want everything laid out for them, then I will get somebody who’s very straightforward.”
Top Takeaways For Advisors
You know exactly what the designations you have mean. When attempting to attract a Gatekeeper, it can help to list the designations that were the most difficult to attain. The Gatekeeper might not know the effort made to acquire that designation, but they might, and some might be interested to learn what that three- or four-letter acronym designates.
-Gatekeepers appreciate advisors who exhibit levels of competence. Especially prior to the establishment of a relationship, be sure to include Gatekeepers on any technical articles you may have written or other types of mediums that highlight your expertise.
-While it is helpful to keep your name in front of Gatekeepers, be respectful of specific issues they may be facing. For example, don’t bother accountants during tax season or at year end.
-Attorneys may be slightly more interested than accountants in your designations. Make sure they understand the credential but don’t over-exaggerate. Both attorneys and accountants face their own requirements for credentials and most will feel that their requirements are more difficult. Whether they are or not, be respectful of their credentials as well.
*According to Spectrem research, there are currently 29.8 million households with $100,000 - $1 million in net worth (not including primary residence, NIPR). There are 9.1 Millionaire households ($1 million - $5 million net worth, NIPR), 1.21 million Ultra High Net Worth households ($5 million - $25 million net worth, NIPR) and 145,000 households with more than $25 million in net worth, NIPR.