Author: George Mentz

A bachelor’s or graduate degree is usually required for personal financial advisors. Employers often do not require a specific field of study for personal financial advisors, but a bachelor’s degree in accounting, finance, economics, business, mathematics, or law provides good preparation for the occupation. Courses in investments, taxes, estate planning, and risk management are also helpful. Programs in financial planning and “personal finance”  are becoming more available in colleges and universities.

In addition, personal financial advisors need strong math, analytical, and interpersonal skills. They need strong sales ability, including the ability to make a wide-range of customers feel comfortable. Personal financial advisor training emphasizes the different types of investors, and how to tailor advice to the investor’s personality. They need the ability to present financial concepts to clients in easy-to-understand language. Some advisors have experience in a related occupation, such as accountant, auditor, insurance sales agent, or broker.

Although not always required, certifications enhance professional standing and are recommended by employers. Personal financial advisors may obtain a Licensed Financial Planner credential. This type of certification, issued by one of the many financial organizations typically requires 3 years of relevant experience; the completion of education requirements, including a bachelor’s degree; assessment, and adherence to a code of ethics and continuing education requirements.

There are many designations offered in the USA that are disclosed to FINRA. [1] The process can be completed in about 18-24 months unless you have already satisfied the exam and course requirements from accredited institution. [2] [3] If competition in the industry continues to grow, i.e., increased number of personal financial advisors is expected to increase by 30% over the 2008-18 period, those providing the most value will realize the highest gains. Education and training are important considerations with regards to clients deciding which personal financial advisor to work with. Thus those personal financial advisors with advanced education degrees and designations may find additional opportunity over those with a bachelor’s degree or even less education.

Over the last 50 years, MBA credentials have been driving their way into the finance landscape along with others such as licensed attorneys and accountants who are also providing wealth management services. This increased competition from higher level service providers creates the need for others to keep pace. There has been a push for higher standards in the last 25 years so that designations and  credentials require double accredited program education and exams which include ACBSP Accreditation, AACSB Accreditation or ABA Accreditation.   Graduate organizations such as American Academy of Financial Management ® offer various designations for personal financial advisors. These include the, CWM ® Chartered Wealth Manager, CAM ™ Chartered/Certified Asset Manager –and MFP ™ Master Financial Professional Planner. [4] [5]

Lastly, masters education as a path to professional certifications and professional designations are currently being offered through post graduate educational institutions. For example the LL.M. Masters of Law Program at Thomas Jefferson School of Law, an American Bar Association approved school in San Diego,  offers degree courses and exams which are accredited by the AAFM® Certification Council as a qualified assessment and education for certification eligibility. In addition, there is a concentration in personal wealth management through the law school’s online masters  program which is the first of its type in the US to be disclosed and reviewed by the ABA American Bar Association. [6] As such, an  excellent opportunity to take courses in tax, finance, estates, asset management, wealth management and compliance is to apply to the online graduate program at: http://llmprogram.tjsl.edu

In closing, a  great start to finding a career in banking and finance would be searching online with  www.AAFM.eFinancialCareers.com

We invite your opinions and comments by posting them below, or by calling the Panel of Experts including:

George Mentz, JD, MBA -  is an international lawyer, editor, author and contributor in the areas of personal finance, securities law, and wealth management.  Prof. Mentz continues to consult  with the US Government and United Nations on issues related to careers and education. Dr. Mentz is the first person in the US to obtain quad credentialing as a lawyer, Double Accredited MBA, Juris Doctorate Degree, financial consultant certification, and qualified financial planner.  Mentz and his educational & professional development firms have worked with thousands of executives in over 150 countries. Dr. Mentz has taught over 200 business and law courses at various accredited institutions, and he is the founder of the Mentz Consumer Protection, Class Action,  and Securities Law Firm http://securitieslawyers.us Mentz has served on the advisory boards of the: The African Economists Association, The Royal Society of Fellows, The Arab Academy of Banking & Finance, The China Wealth Council, The GFF Global Finance Forum in Switzerland, and the Indian Academy of Financial Management.    Mentz is the winner of several faculty awards and a meritorious award for charitable service.   Mentz has been a pioneer in promoting  accredited program courses, exams and standards as a government recognized  path to professional certification.

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[1] FINRA Financial Industry Regulatory Authority –  Understanding Professional Designations – http://apps.finra.org/DataDirectory/1/prodesignations.aspx

[2] See generally Louise Tutelian. “Dream Jobs: Six-Figure Salaries and a Bright Future- Financial Advisor”. CBS Moneywatch.com. 2/23/2011. http://moneywatch.bnet.com/career-advice/article/six-figure-jobs-financial-advisor/6197979/. Last Accessed 5/24/2011.

[3] American College Program CHFC – http://www.theamericancollege.edu/financial-planning/chfc-advanced-financial-planning

[4] United States Government  Department of Labor, Bureau of Labor and Statistics, Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

And also Wall Street Globe References . http://www.wallstreetglobe.com/news.html

[5] FINRA Financial Industry Regulatory Authority –  Understanding Professional Designations – http://apps.finra.org/DataDirectory/1/prodesignations.aspx

[6] See Thomas Jefferson School of Law, LL.M. Program. http://llmprogram.org/curriculum.html.

Author: George Mentz

Today’s article discusses the similarities of the personal financial advisor position with that of financial analysts. We draw comparisons in light of market data and trends.

As presented in a previous article, it was reported by 2016 jobs for personal financial advisors will have grown over 40% over 2006 levels, while financial analyst jobs—think FAD Financial Analyst Designates or  AFA Accredited Financial Analysts  types—will have grown over 30%. [1] The financial analysts job market is thus in slightly slower growth pattern than personal financial advisors.

As commentators have noted, there has traditionally been very little overlap between the securities analyst and financial planning communities.  [2] This conclusion is based on the “number of financial analysts who are also financial planners.  It thus “appears that relatively few analyst professionals have pursued personal financial planning.” Generally speaking, financial planners and financial analysts  are not required to hold double accredited program degree or diplomas; thus, there has been a recent transition toward accredited business school program exams and education that leads to degree and certification eligibility.

Interestingly it is convenient that the financial planning and analysis jobs would start to merge as somebody who has completed a financial analyst designation  will already have learned much of the material related to financial planning or private banking  [3] However, graduate professional designations such as the CWM ® certification [4] which is awarded from the American Academy of Financial Management ®  [5] require further graduate education in extra areas beyond investments, finance or planning including:  economics, trusts, estates, global tax, macro forces, private banking, wealth strategy, money and banking, hedge funds, global risk management, and other. [6]

For example, financial analysts may provide guidance to businesses and individuals making financial decisions. The financial analyst role or profession began with a focus on financial bookkeeping and reporting skills, but has morphed over the recent years into a financial research job with a focus on fundamentals.  These skills are similar to those that financial advisors use when consulting with clients, but advisors and planners by default have been trained more on the issues of FINRA rules, retirement planning, tax, estates, personal finance, insurance sales, and education planning.  Moreover, financial analysts now tend to focus on assessing the performance of stocks, bonds, commodities, sectors, and other types of securities.  These skills also are generally employed by the personal financial advisor. [7]

What’s more, some experienced managers, generally portfolio managers, supervise a team of analysts and select the mix of products, industries, and regions for their company’s investment portfolio. These managers or directors are not only responsible for the overall portfolio, but are also expected to explain investment decisions and strategies in meetings with investors.

An accredited bachelor’s or graduate degree is normally required for entry level or higher financial related positions. Most employers require a bachelor’s degree in a related field, such as finance, business, accounting, statistics, or economics. The business schools that are ACBSP or AACSB accredited represent the top business programs that have met the requirements of double accreditation. [8] An understanding of statistics, economics, and business may be essential, and knowledge of accounting policies and procedures, corporate budgeting, and financial analysis methods is recommended.   A excellent opportunity to take courses in tax, finance, estates, asset management, wealth management and compliance is to apply to the online graduate program at: http://llmprogram.tjsl.edu

Since both financial advisors, planners and analysts require similar qualifications, those individuals who have the proper accredited education can easily transition between the two functions providing more value to clients.  All entry level persons should be prepared to study for and take relevant regulatory licensing exams such as: Insurance License, Series 6, Series 7, Series 65, 66 or  other state exams that are offered or regulated by the Insurance Commissioner [9] or  FINRA [10].

A great start to finding a career in banking and finance would be searching online with  www.AAFM.eFinancialCareers.com This career portal shows available jobs around the world in finance, banking, investments, hedge funds, risk management, insurance, compliance and more.  [11]

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[1] United States Government  Department of Labor, Bureau of Labor and Statistics, Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

[2] Ibid.

[3] Dan Olsen. “Personal Financial Planning: Making the Transition”. The Finance Professionals Post. New York Society of Security Analysts.”

[4] FINRA Financial Industry Regulatory Authority –  Understanding Professional Designations – http://apps.finra.org/DataDirectory/1/prodesignations.aspx

[5] United States Government  Department of Labor, Bureau of Labor and Statistics, Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

[6] AAFM ® CWM Curriculum Facts: www.aafm.us or http://www.financialcertified.com/certified_chartered_wealth_manager_cwm_wiki.html

[7] Financial Advisors http://financecareers.about.com/od/financialadvisor/a/finadvisor.htm

[8] List of Double Accredited Business Schools http://financialanalyst.org/accreditededucation.html CHEA Council for Higher Education Accreditation http://www.chea.org/Directories/special.asp

[9] National Association of Insurance Commissioners http://www.naic.org/state_web_map.htm

[10] FINRA Financial Industry Regulatory Authority http://www.finra.org/

[11] eFinancialCareers.com www.AAFM.eFinancialCareers.com

Author: George Mentz

Today we explore additional factors which will likely contribute the job growth of personal financial advisors.

Economy

First, the question arises concerning the current financial environment with regards to financial planning. In other words, what negative effect has the financial crisis had on the financial planning market? Some commentators believe the impact is great. [1] The marketplace for private investors has changed significantly since 2008. Many investors are becoming more personally responsible for retirement savings and are seeking advice from professionals.

On the other hand, increased regulation regarding personal financial advisory services has grown over the last 5 years.[2] If this pattern continues personal financial advisors may decide to no longer participate in a market where the cost of compliance is too high. This will also prevent new advisors from entering the field.

Market Entry and Lifestyle

Nevertheless, the generally low barriers of entry into the industry make the position attractive for those seeking employment directly from school or through career transition for a variety of reasons including unemployment.

One report notes that about 30% of personal financial advisors are self-employed, most often operating small firms in urban areas.[3] Moreover, the flexibility in terms of lifestyle that the personal financial advisor enjoys is preferable to some over traditional office employment. Because most personal financial advisors are not traditional employees, work and lifestyle flexibility may attract a new generation of workers.

One global organization, The AAFM American Academy of Financial Management ® says about 20% of their  members are independent or registered investment advisors who provide ‘fee based management” services as compared to commissions on the purchase or sale of stocks, securities, or insurance products.   These wealth managers simply earn a percent of the total assets under management.   The trend for high net worth clients over the last 10 years has been to work with wealth management professionals who can assist with investment management services for the super rich.  The AAFM ® Certification Board of Standards works with an accredited law school in the USA which offers the first graduate law program in wealth management that can lead to a masters degree while similar professional development programs are offered by NYU and Wharton [4]

“Although successful [personal financial advisors] can live quite comfortably, their compensation has typically been below the level of top jobs on Wall Street. As financial industry compensation models reset themselves, however, the relative returns enjoyed by [these advisors] may look more attractive.” [5]

The San Diego Business Journal reported in 2009 that wealth management salaries held steady in the midst of the crisis, ranging from $150,000 to $ 400,000.[6] What’s more, “bidding wars among firms for top advisors are not uncommon” and packages will include “bonuses equaling two or three times the payouts from just a few years ago”. [7]

A great start to finding a career in banking and finance would be searching online with  www.AAFM.eFinancialCareers.com This career portal shows available jobs around the world in finance, banking, investments, hedge funds, risk management, insurance, compliance and more.  [8] Further, an  excellent opportunity to take courses in tax, finance, estates, asset management, wealth management and compliance is to apply to the online graduate program at: http://llmprogram.tjsl.edu

Median annual wages, excluding bonuses, of wage and salary financial analysts were $73,150 in May 2008, which is more than double the national median wage. The middle 50 percent earned between $54,930 and $99,100. The lowest 10 percent earned less than $43,440, and the highest 10 percent earned more than $141,070. Annual performance bonuses are quite common and can be a significant part of their total earnings. [9]

In light of the recent scandals with Bernie Madoff etc., clients and customers should be aware of who their advisor or planner uses as a custodian for  their funds.  Generally speaking, independent advisors should have  a 3^rd party administrator and custodian who protects and holds the assets, provides online account access, and sends the clients statements along with having SIPC insurance protection. Further, your  advisor should be registered with the state or federal government where you can review or check their records. [10]

We invite your opinions and comments by posting them below, or by calling the Panel of Experts including:

George Mentz, JD, MBA -  is an international lawyer, editor, author and contributor in the areas of personal finance, securities law, and wealth management.  Prof. Mentz continues to consult  with the US Government and United Nations on issues related to careers and education. Dr. Mentz is the first person in the US to obtain quad credentialing as a lawyer, Double Accredited MBA, Juris Doctorate Degree, financial consultant certification, and qualified financial planner.  Mentz and his educational & professional development firms have worked with thousands of executives in over 150 countries. Dr. Mentz has taught over 200 business and law courses at various accredited institutions, and he is the founder of the Mentz Consumer Protection, Class Action,  and Securities Law Firm http://securitieslawyers.us Mentz has served on the advisory boards of the: The African Economists Association, The Royal Society of Fellows, The Arab Academy of Banking & Finance, The China Wealth Council, The GFF Global Finance Forum in Switzerland, and the Indian Academy of Financial Management.    Mentz is the winner of several faculty awards and a meritorious award for charitable service.   Mentz has been a pioneer in promoting  accredited program courses, exams and standards as a government recognized  path to professional certification.

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[1] Lindsey Gerdes. “Personal Financial Advisor Among The 10 Most Promising Jobs For Recent Grads?” Bloomberg Business. Posted: April 13, 2009. http://www.businessweek.com/managing/blogs/first_jobs/archives/2009/04/personal_financ.html. Last Accessed 2/24/2010.

[2] E.G., Provisions of the “The Dodd-Frank Wall Street Reform and Consumer Protection Act”.

[3] Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

[4] TJSL Graduate Law School Program with AAFM Accredited Certification Program http://llmprogram.tjsl.edu

[5] Ibid.

[6] See Advisorfyi.com-Summit Business Media/The National Underwriter Company. “Wealth Management Employment in the Coming Decade.” Posted October 11th, 2010. http://www.advisorfyi.com/2010/10/wealth-management-employment-in-the-coming-decade/. Last Accessed 5/25/2011.

[7] Helen Kearney. Reuters. “Private banks battling for advisers to super-rich”. 9/17/2010. http://www.reuters.com/article/2010/09/17/idUKN1713016720100917?pageNumber=2. Last Accessed 5/25/2011.

[8] eFinancialCareers.com www.AAFM.eFinancialCareers.com

[9] United States Government  Department of Labor, Bureau of Labor and Statistics, Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

[10] SEC Investment Advisor Registration http://www.sec.gov/divisions/investment/iaregulation/regia.htm

By: Dr. George Mentz

This article series discusses the job prospects of personal financial advisors in today’s marketplace. We review the job growth expectations, factors contributing to job growth, comparisons to other industries as well as educational requirement trends for the industry.

Generally, a personal financial advisor/planner usually operates within a bank, brokerage, or insurance firm or on his or her own or in a small firm, many with a client base whose assets do not exceed $1 million. Moreover, personal financial advisors assess the financial needs of individuals and assist them with investments, tax laws, and insurance decisions. Advisors help their clients identify and plan for short-term and long-term goals. Advisors help clients plan for retirement, education expenses, and general investment choices. Many also provide tax advice or sell insurance. Although most planners offer advice on a wide range of topics, some specialize in areas such as retirement and estate planning or risk management.

Personal financial advisors usually work with many clients and often must find their own customers. Many personal financial advisors spend a great deal of their time marketing their services. Many advisors meet potential clients by giving seminars or through business and social networking. Finding clients and building a customer base is one of the most important aspects of becoming a successful financial advisor.

“The [personal financial advisor] position represents one of the most rapidly expanding and least well-known segments in financial planning.” [1]

The most recent Bureau of Labor Statistics project growth in the area of personal financial advisors by 30 percent over the 2008–2018 period. This figure is represents much faster growth percentages than the average for all occupations. [2] CNN Money Reports, “demand for personal financial advisors is projected to grow… 41% between 2006 and 2016.” [3] [4]

Some career oriented companies have published a list of 10 promising jobs for the class of 2009. The top 10 list included personal financial advisors. The list included data provided by the National Association of Colleges and Employers Job Outlook 2009 survey.[5] [6]

However, these figures may actually be an underrepresentation of the real growth of the role of the personal financial advisor. Many accountants and attorneys are expanding their practice to include more financial management services.  Further, females currently comprise roughly  a quarter of all regulated Financial Planners; “[e]ncouragingly, however, their representation in the industry appears to be growing.” [7]

Lastly, Independent financial advisor positions or independent firms continue to grow says Charles Schwab.[8] The vast growth of the independent advisors (outside of the brokerage firm, bank and insurance firm) has been supported by the growth of the technology that allows individuals and small firms to manage client investments.   We will continue this series with a discussion of factors causing job growth in the industry. Please check back soon for more updates.

A great start to finding a career in banking and finance would be searching online with  www.AAFM.eFinancialCareers.com This career portal shows available jobs around the world in finance, banking, investments, hedge funds, risk management, insurance, compliance and more.  [9]

A excellent opportunity to take courses in tax, finance, estates, asset management, wealth management and compliance is to apply to the online graduate program at: http://llmprogram.tjsl.edu

George Mentz, JD, MBA -  is an international lawyer, editor, author and contributor in the areas of personal finance, securities law, and wealth management.  Prof. Mentz continues to consult  with the US Government and United Nations on issues related to careers and education. Dr. Mentz is the first person in the US to obtain quad credentialing as a lawyer, Double Accredited MBA, Juris Doctorate Degree, financial consultant certification, and qualified financial planner.  Mentz and his educational & professional development firms have worked with thousands of executives in over 150 countries. Dr. Mentz has taught over 200 business and law courses at various accredited institutions, and he is the founder of the Mentz Consumer Protection, Class Action,  and Securities Law Firm http://securitieslawyers.us Mentz has served on the advisory boards of the: The African Economists Association, The Royal Society of Fellows, The Arab Academy of Banking & Finance, The China Wealth Council, The GFF Global Finance Forum in Switzerland, and the Indian Academy of Financial Management.    Mentz is the winner of several faculty awards and a meritorious award for charitable service.   Mentz has been a pioneer in promoting  accredited program courses, exams and standards as a government recognized  path to professional certification.

We invite your opinions and comments by posting them below, or by calling the Panel of Experts.

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[1] Dan Olsen. “Personal Financial Planning: Making the Transition”. The Finance Professionals Post. New York Society of Security Analysts.” 2/24/2011. http://post.nyssa.org/nyssa-news/2011/02/personal-finance-planning-making-the-transition.html. Last Accessed 5/25/2011.

[2] Bureau of Labor Statistics. United States Department of Labor. “Occupational Outlook Handbook, 2010-11 Edition-Personal Financial Advisors”. Last Modified Date: December 17, 2009. http://www.bls.gov/oco/ocos302.htm. Last Accessed 5/24/2011.

[3] CNN Money. “Most Job Growth-Personal Financial Advisor”. 2009. http://money.cnn.com/galleries/2009/moneymag/0910/gallery.bestjobs_jobgrowth.moneymag/3.html. Last Accessed 5/24/2011; See also Bureau of Labor Statistics, United States Department of Labor, 2007 (last updated December 18, 2007). ”Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2008-09 Edition.”

[4] United States Government  Department of Labor, Bureau of Labor and Statistics, Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

[5] Lindsey Gerdes. “Personal Financial Advisor Among The 10 Most Promising Jobs For Recent Grads?” Bloomberg Business. Posted: April 13, 2009. http://www.businessweek.com/managing/blogs/first_jobs/archives/2009/04/personal_financ.html. Last Accessed 2/24/2010.

[6] ABC News/Money – “ Book: Financial Planner is Best Job” – http://abcnews.go.com/Business/story?id=89423&page=1

[7] Dan Olsen. “Personal Financial Planning: Making the Transition”.

[8] Independent Investment Advisors in Growth Mode, Says 2010 Charles Schwab RIA Benchmarking Study   http://www.businesswire.com/news/home/20100707005637/en/Independent-Investment-Advisors-Growth-Mode-2010-Charles Published July 07, 2010

[9] eFinancialCareers.com www.AAFM.eFinancialCareers.com

You’ve been on a few “dates,” and you talk on the phone every couple weeks, but how well do your prospects and existing clients know you and understand your core personal investing philosophy? Small talk breaks down barriers and common interests keep the conversation moving, but taking the advisor-client relationship to the next level takes some work—and a lot of research. A recent survey gives us a head start by elucidating the communication divide that holds many advisors back from taking the big plunge with their prospects.

The survey found that HNW clients favor electronic communication media more than their advisors. Twice as many millionaires than advisors would like to use technology-enabled media—smart phone applications and social media. While 85% of millionaires are willing to communicate through social-media, e-mail, and text messages, only 43% of brokers and financial advisors share that willingness. And your millionaire clients are also more likely to use LinkedIn than you are (28% to 16%). And a third of millionaires already use social media in general as part of their professional life.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For other client development discussions in Advisor’s Journal, see Advisors’ Stairsteps of Influence (CC 11-49), Getting Your Feet Wet in the Social Media Market (CC 11-79) & Are Portfolios-To-Go Threatening Your Business? (CC 11-77).

Why is this Topic Important to Wealth Managers? This blogticle presents discussion on proposed rules that would affect wealth managers who charge performance fees in association with asset management. Given the proposed rule some clients may become exempt from the performance fee structures allowed, thus staying informed on the subject is critical for some wealth managers.

Earlier this week the Securities and Exchange Commission provided a public notice of its plan to raise certain dollar thresholds that would need to be met before investment advisers can charge their clients performance fees.

Generally, section 205(a)(1) of the Investment Advisers Act generally prohibits an investment  adviser from entering into, extending, renewing, or performing any investment advisory contract  that provides for compensation to the adviser based on a share of capital gains on, or capital  appreciation of, the funds of a client. [1]

Congress prohibited these compensation arrangements (also known as performance compensation or performance fees) in 1940 to protect advisory clients from arrangements it believed might encourage advisers to take undue risks with client funds to increase advisory fees.

By 1970 however, Congress provided an exception from the prohibition for advisory contracts relating to the investment of assets in excess of $1,000,000, if an appropriate “fulcrum fee” is used. [2]

Congress subsequently authorized the SEC to exempt any advisory contract from the performance fee prohibition if the contract is with persons that the SEC determines do not need the protections of that prohibition. [3]

The SEC thus adopted rule 205-3 in 1985 to exempt an investment adviser from the prohibition against charging a client performance fees in certain circumstances.

Currently, Rule 205-3 under the Investment Advisers Act allows an adviser to charge its clients performance fees in certain circumstances. Two of the circumstances are:

1. The client has at least $750,000 under management with the adviser.
2. The adviser reasonably believes the client has a net worth of more than $1.5 million.

Section 418 of the Dodd-Frank Act requires the SEC to issue an order to adjust for inflation these dollar amount thresholds by July 21, 2011, and every five years thereafter. As a result, the SEC issued its recent notice that it intends to issue an order to revise the dollar amount tests to $1 million for assets under management and $2 million for net worth.

The SEC also proposed related amendments to Rule 205-3 that would:

• Provide the method for calculating future inflation adjustments of the dollar amount tests.
• Exclude the value of a person’s primary residence from the determination of whether a person meets the net worth standard.
• Modify the transition provisions of the rule to take into account performance fee arrangements that were permissible at the time the adviser and client entered into their advisory contract.

The SEC is now seeking public comment on these proposed related rule amendments.

For previous coverage of recent SEC rulemaking in Advisor’s Journal, see SEC Unprepared to Implement a Fiduciary Standard for Broker-Dealers (CC 11-33), SEC Fiduciary Standard Study Answers Few Questions (CC 11-25), Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97) & What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10-40).

Next week’s blogticles will discuss current wealth management issues.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

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[1] 15 U.S.C. 80b-5(a)(1).

[2] A fulcrum fee generally involves averaging the adviser’s fee over a specified  period and increasing or decreasing the fee proportionately with the investment performance of  the company or fund in relation to the investment record of an appropriate index of securities  prices.  See rule 205-2 under the Advisers Act.

[3] Section 205(e) of the Advisers Act.

When advisors hear the term “social media marketing,” the usual list of suspects comes to mind: LinkedIn, Facebook, and Twitter. Could Advisor Pages, a new advisor search engine, be the next business boosting social media site like LinkedIn, or will its cost to advisors outweigh any marketing benefits?

The hype surrounding social media marketing has yet to die down, and advisors’ use of online marketing techniques continues to grow. Adding to the panoply of sites relevant to advisors, BrightScope recently launched Advisor Pages, a free online service that allows consumers to search for financial advisors. Advisor Pages compiles data from public sources, including the Financial Industry Regulatory Authority (“FINRA”) and the Securities and Exchange Commission (“SEC”). Search results can be tailored based upon advisors’ names, locations, amounts and types of assets under management (“AUM”), employers, formal complaints, legal disputes and more.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber)

For previous coverage of social media in Advisor’s Journal, see Getting Your Feet Wet in the Social Media Market (CC 11-79) & It’s Not Facebook That’s Making Microsoft Obsolete: Advisor Technology Trends (CC 11-49).

Why is this Topic Important to Wealth Managers? Our discussion relates to motivations of clients given the current economic state of affairs. The blogticle presents results from a recent survey relating to current challenges facing wealth managers, as well as what is influencing the way clients are perceiving their retirement and what must be done about it.

Senior Market Advisor, published by Summit Business Media, recently announced the results of its Advisor Survey in the March 2011 issue.

The second annual Advisor Survey published by Senior Market Advisor asked subscribers, licensed insurance and financial advisors serving the wealth planning market, to provide their thoughts on their practice and the state of the industry. Questions included issues that keep them up at night, what marketing strategies are working, and not working in the current economic climate, how new technology has changed the way they do business, whether or not advisors’ relationships with their longtime clients and prospects have changed, as well as the fears their clients are facing.

“We had a fantastic response to our second annual Advisor Survey, with more than 800 advisors participating,” said Senior Market Advisor Editor Daniel Williams. “We received valuable data from advisors and obtained great insights on their challenges, how they are adapting to a changing marketplace, and how they’re finding success with new lead generation techniques.”

Highlights of the Advisor Survey include:

• The #1 thing keeping advisors up at night is Lead Generation, taking the attention away from the economy in last year’s study.
• 59% said that community involvement was their most effective strategy to gain new clients in the current economic climate.
• 49% of advisors say that new technology has increased productivity, while 32% believe it has taken away the personal touch.

Wealth managers were asked: “Where are you having your biggest success right now?”

The survey answers to this question indicated participants specify annuities as still their bread and butter, but nearly a quarter say life insurance is just as important a part of their sales. Other products with particularly high take rates include Med Sups, Medigap and even standard health insurance; group benefits packages; reverse mortgages; funeral trusts; and final expense planning. However, only 7% of respondents say that they are having current success with long-term care insurance.

One interesting question presented to wealth managers by the survey was: “When you are talking to your senior clients, do you feel their relationship or attitude with you has changed over the past couple years?”

The Responses:

• 46% say yes, it has gotten better
• 42% say it hasn’t changed at all
• 18% say yes, it has gotten worse

The survey also indicates that approximately 53% of respondents have a website or a blog. The results presented advice to wealth mangers with regards to social media and electronic marketing; Rick Brooks and Kristen Luke said respectively:

“Develop a detailed social media plan with specific goals you want to achieve with your website content as well as the number of followers and potential clients you want to access through your Facebook, LinkedIn and Twitter pages.”

“Review the content you post online to make sure it remains accurate. Remember—rules and regulations change. Be ready to change with them.”

Perhaps the most interesting perspective the survey presented was aimed at identifying client fears. Wealth managers were asked: “When you talk to your clients, what are the biggest fears they’re dealing with?” They responded:

Outliving their money…65%

State of the economy …67%

Having to work longer than planned…44%

The Government…51%

Health Care…62%

Results were featured in the March issue of Senior Market Advisor, and the complete survey results are available online at SeniorMarketAdvisor.com.

Tomorrow blogticle will continue to address issues surrounding the private wealth management practice including the step transaction doctrine.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

Advisors understand that referrals from existing clients are their best source for new business, but what else is working, and how effective are other methods being used by advisors to generate new business? A recently released survey provides us with a laundry list of approaches used by advisors to solicit new clients and gauges the productiveness of their marketing efforts.  The survey, which polled 262 financial advisors in November and December of 2010, found that client referrals are still the top way advisors generated new business. Behind client referrals, professional referrals were the second biggest producer.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of advisor client management in Advisor’s Journal, see Should You Fire Clients? (CC 10-65).  For marketing and time management tips, see the Soft Skills section of Advanced Markets AdvisorFX.

Why is this Topic Important to Wealth Managers? Provides wealth managers with update on industry statistics.  Discusses areas where wealth managers are needed now and in the future.

According to a recent report by Javelin Strategy and Research (California); “[a]lthough the recent ‘Great Recession’ has caused millions of Americans to tighten their belts financially, nearly one out of five consumers are financial sleepwalkers”—those who do not manage their personal finances. [1] That’s right; at least 20% of Americans are not currently using wealth managers to manage their personal finances. The report states that the rate is more than double that of 2009. [2] This presents a vast opportunity for wealth managers to expand their market share.

The United States Department of Labor project that personal financial advisors are estimated to grow by 30 percent over the 2008–18 period.  “Growing numbers of advisors will be needed to assist the millions of workers expected to retire in the next 10 years.” [3] Further, “[a]s more members of the large baby boom generation reach their peak years of retirement savings, personal investments are expected to increase and more people will seek the help of experts.” [4]

Moreover, there is a trend in corporate America to replace “traditional pension plans with retirement savings programs, so more individuals are managing their own retirements than in the past,” creating additional opportunity for wealth managers. [5] In addition, as medical technology continues to advance and people on average, live longer, the need for additional financial planning arises.

The average compensation for wealth managers is around $89,920 to $110,130 for those marketing insurance products and services as well as other financial investments. [6] New York has the most wealth managers in terms of total numbers. [7] In addition, New York wealth managers made on average $146,460, the most from any state. [8]

A significant number of wealth managers are located in New York, California, and Florida mostly. [9] Vero Beach Florida had the highest concentration of wealth managers per capita earning around $84,430. [10] Approximately, 63 percent work in the finance and insurance industries, and approximately 29 percent of “personal financial advisors are self-employed, operating small investment advisory firms.” [11]

For previous blogticles covering the wealth management industry, see the series beginning The Future of Wealth Management

Next week’s blogticles will discuss insurance and tax related issues.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

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[1] Personal Finance Management (Part 1): What Consumers Really Want from PFM.  Javelin Strategy & Research.  https://www.javelinstrategy.com/research/Brochure-199.  Last Accessed 11/24/2010.

[2] Personal Finance Management (Part 1): What Consumers Really Want from PFM.  Javelin Strategy & Research

[3] Occupational Outlook Handbook, 2010-11 Edition.  United States Department of Labor.  Bureau of Labor Statistics.  Personal Financial Advisors.  http://www.bls.gov/oco/ocos302.htm.  Last Accessed 11/24/2010.

[4] Occupational Outlook Handbook, 2010-11 Edition.  United States Department of Labor.

[5] Id.

[6] Occupational Employment Statistics. U.S. Department of Labor.  Bureau of Labor Stastics.  Personal Financial Advisors. May 2009.  http://www.bls.gov/oes/current/oes132052.htm. Last Modified Date: May 14, 2010. Last Accessed 11/24/2010.

[7] Id.

[8] Id.

[9] Occupational Outlook Handbook, 2010-11 Edition.  United States Department of Labor.

[10] Occupational Employment Statistics. U.S. Department of Labor

[11] Occupational Outlook Handbook, 2010-11 Edition.  United States Department of Labor.