Who Speaks For the Future?

[lbarrett]

Ahead of next month's Business & Wealth Management Forum in Chicago, it's time to start asking some big-picture questions. For example, how could our profession have a bigger political impact than we do today and if there are better ways to add value than simply tending client portfolios? What do you think?

[Bradly T.]

Please define "our" profession. Planners? Advisors? Fund managers? Reps? Others? Bob Veres and I are not members of any "we" or "ours" - he's certainly not a practitioner of any flavor. So who are "we" talking about?

[B Smith]

Why is your assumption that political impact leads to positive client outcomes, rather than wasted lobbying dollars?

[Bradly T.]

HERE WE GO AGAIN!!!!!! Unbelievable. Now, according to Bob V., ONLY RIA advisors are professionals. And the goal of his "summit" is to determine how to tell the public that everyone else is "unprofessional". Are you kidding me??


I guess Bob's not quite done "serving" the industry - despite results to date (new SRO for advisors, probably our old friend FINRA, new inspections and audits, new rules based fiduciary obligations and disclosures, even thinner margins and higher costs, and higher minimums for accounts....but hey, that's just so far....keep digging Bob, keep digging!).



So he now coopts the term planner and overlays onto who is actually being discussed - investment advisors - as though RIAs are planners and planners are RIAs but nobody else is anything but unprofessional crooks. Balderdash!


Someone fire this crackpot! I doubt his industry will survive him - whatever "profession" that may be. It's so far from Main Street and reality both as to be irrelevant to most.



That industry/business model which takes the most money away from clients and puts the most money in the industry's pocket and which excludes over 80% of all investors and their account balances (just read average IRA in America is under $28k) and eliminates over 80% of professional practice models thriving today which provides the full spectrum of protection, investment, and planning service today. But we're not professionals?



Actually Bob, it's YOU who is both not a professional and unprofessional at the same time. You don't even know what financial planning is or what planners do or who or how many there are. But I promise, we won't let you or the Noncoalition take away what is NOT yours to dimminish the discipline, power, and availability of financial planning solely for the benefit of your precious millionaires and top dollar RIAs.



This is merely an attempt to kill competition by legislation for the benefit of a few and at the cost of many. Pure elitism. To return to your recurring medical analogies - it is THIS very process that makes our medical care system the most expensive and least accessible while rated below Cuba in quality. This is America Bob.....we prefer competition and open markets and access. What a Pinko. I meant that to be insulting.

[Bradly T.]

So there's 11,500 RIAs in this country and 500 of them manage over 85% of RIA AUM. But the 100s of thousands of the rest of us are NOT professionals by Bob's "standards". Amazing. Isn't LPL itself larger by number of reps/advisors? Well yes it is. Just one dual BD represents more households and more practitioners than all RIAs combined (but not total AUM). Elitist doesn't begin to describe such a position as promoted by Bob.


WARNING to EVERY firm and fund at Bob's "summit" - YOU will be tainted and shunned by all of us non-professionals. Watch your step......oh yes, watch your step.

[the observer]

Bobbie V's a legend in his own mind. Mostly because he ensures that anyone sitting on a panel with him agrees with his position. As with the CFP Board, they shy away from real debate because they'd lose every time. This summit will be an excuse for back slapping and the "good old Bob" routine as mindless sheep vie for a place in Bob's next column.

[Stephen Winks]

BradleyT,

Bob Veres is refering those that provide investment and administrative counsel to consumers, both retail and institutional. Thus your question, "Please define "our" profession. Planners? Advisors? Fund managers? Reps? Others?," incorporates any and everyone who is lisensed to sell investment products or registered as a advisor with their state or the SEC. This includes everyone you cite, Planners, Advisers, Fund Managers, Brokers, plus insurance agents, bankers, and anyone who renders "personalized advice" as their profession. Personalized advice is a technical term that infers fiduciary standing--to which the vast majority of consumers prefer as cited by several surveys early in the debate on fiduciary standing.

Pretty embarassing someone had to expain that to you. Even more embarassing that you would take umbrage at such an obvious citation by Veres.

As for you considering yourself as "us" as in speaking for us, most of the 11,400 advisors you cite really want to act in their client's best interest, would love for it to be safe for them to acknowledge fiduciary standing but do not have access to the necessary expert fiduciary support infrastructure, would love to be able to be accountable for every recommendation they have ever made necessary for continuous comprehensive counsel required for fiduciary standing, but they are not provided those enabling resources because a distinct minority of advisers that you incorrectly refer to as "us" are fighting being accountable for your recommendations and being responsible for providing ongoing fiduciary duties based on objective non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters.

The vast majority of sucessful brokers truely want to act in their clients best interest as affirmed by numerous surveys. Why is it that you dispute the facts and manufacture mis- information that excuses the brokerage industry from making advice/fiduciary standing safe, scalable and easy to execute and manage? Could it be as insurance agents, the consumer's best interest is secondary to your own.

I hope indeed you are not the "us" you say you speak for. If so, its is caveate emptor, buyer beware relationship you have with your clients, as you are not acting in your client's best interest and the reliability of your counsel is forced to be checked by an advisor who will indeed act in the consumer's best interest.

SCW

[Bradly T.]

Embarrasing indeed....especially since the 11,400 number cited is the total number of all RIAs in America - they better be acting as fiduciaries since this is the obligation in-force already.


It is obvious Bob's "our profession" does NOT include planners, brokers, or reps from his descriptions, including: "Alternatively: are there better ways to add value than simply tending client portfolios?" .....and....."or limit ourselves to issues that most directly affect the planning profession, like the fiduciary and regulatory discussions?"



Neither question has ANY relevancy to financial planning - not for practitioners nor the discipline/process. Financial planners do NOT "tend" client portfolios and Dodd/Frank, the SEC, or FINRA has ANYTHING to do with the profession of financial planning. Clearly, Bob either does not know the difference between financial planning and investment advice, or he is substituting one well defined profession with another for some agenda or objective. But he obviously DOES know the difference since one of his goals is to discuss is whether "the profession" should lobby (as they have been) for the regulation of financial planning.



What's embarrasing is your inability (and Bob's) to discern the differences in both function and regulation of the two distinctly different professions comingled throughout his presentation. But then neither of you ARE financial planners, nor could either of you list the elements or steps in the process of planning. But here's a clue - factually, security selection is NOT an element of planning at all. Savings rates, assumed and projected annualized return, time frame future/present value calculations, and distribution rates are elements - allocations and selection are not (never have been). Tax, legal, insurance, and investment advisory services are distinctly different and already regulated by state and federal agencies.....and financial planners are PROHIBITED from giving ANY advice in any of these elements without seperate licensing and registration FOR EACH of those (and other) elements of advice.



Additionally, his topics include...."the difference between professionals and nonprofessional agents or representatives (emphasis mine) whose business model is not to put the client's interest first?" So, no insurance agents or registered reps or financial planners or brokers are included in his list of "professionals". And, as you so frequently do also, he assumes that those under the current obligation actually do act in their clients' interest (despite all the facts to the contrary) and that no one else does or can or even desires to (again, despite the absurdity of the position and all the evidence to the contrary). By the way, the only business model indifferent to or actively managed against their client's interest is, by definition, a fraudulent and criminal enterprise.



Now, I'm not a great writer or even very articulate (and Winks, your skills are even far less in that regard) but Bob? Well, he's quite the professional. I doubt he writes anything not intended. So he has misidentified "our profession" by applying the words planning and planners and he has excluded from "our profession" all but RIAs...total population - 11,400 with 5% of those managing 85% of all RIA AUM. By his own words he is defining "our profession" as including 11,400 RIAs and excluding the 98% of the rest of the securities industry - not counting agents or financial planners. As a CFP myself (and last I heard there are over 65,000 certificants - which certainly does not include all planning professionals by even one third), I am outraged that Bob substitutes planner for investment advisor and presumes all 11,400 advisors are qualified planners or even attempt to provide comprehensive planning at all and that all other planners, who are not RIAs, are neither professional nor act in their client's best interest.



Finally, let me say that Bob is NOT in our profession. He's a writer.....not a planner or rep or even advisor. Want to be one of us? Get your ass licensed, registered, certified, and in practice.....and stay that way for a decade or three. Then, and only then, are either of you entitled to be so presumptous as to even apply the term...."our profession." And I have never presumed to speak for any other practitioner nor indict and insult those who practice in any other model besides my own. The key word being "practice". No one can or should "Speak" for any profession who is not even within that profession. As far as speaking for planners or our future, neither you nor Bob have any business pretending you speak for us.....since neither of you evidently know anything about planning or planners.

[Bradly T.]

By the way, isn't the CFP Board required to defend the terms planner and financial planning from being usurped in this way. Didn't we go through this 20 years ago when every BD wanted to co-opt the term/title? Now Veres claims planners are investment advisors and investment advisors are planners but no response? Or litigation? Can a certficant sue on behalf of the Board? Someone needs to shut this mad man up....or at least recognize his chicanery. He is leading our entire discipline to the gallows. With no protest or shots fired. Simply amazing.

[Stephen Winks]

Bradley T,

1. Are you even remotely familar with the term "universal fiduciary standard"?
2. Are you saying that planners do not tend to client portfolios? Then you agree you are neither accountable for your recommendations nor have any ongoing fiduciary duties required for fiduciary standing. How can you act in a fiduciary capacity and not tend to client's portfolios?
3. Your logic that Bob Veres excludes "planners, brokers, or insurance representatives' from being part of the "profession" is at best a most bizzare interpretation.
4. What about the vast majority of advisers who think YOU are leading the entire discipline (which you can't define) to the gallows?
5. Do you actually think you are acting in a fiduciary capacity on behalf of your clients, in your client's best interest? If so, I have about ten questions for you that would prove otherwise.
6. Do you think you are qualified as a financial planner? If so I have a few questions for you that would prove otherwise. Don't forget, I was President of FSC Advisory, working for John Bell Keeble the Father of Financial Planning, who took financial planning further than it has ever been taken to date. Talking about outrage--your absurd assertions have no basis in reality.
7. As for professional standing, you say Bob Veres is just a writer. Are you willing to put your credentials to the test? I don't think so--there is absolutely no substance behind your arguements. Bob Veres is all about substance, which is why he makes you so uncomfortable. He speaks the truth and can prove it.
8. Can you offer ANY proof for anything you say?

SCW

[efmoody]

I have finished "Financial Planning Fiduciary Standards under Dodd Frank" The material is complmeneted by two separate videos that are approved by the California State Bar for continuing legal education (CLE) with reciprocity in all other states.

I will back up this work against anyone or any orgainzation in the U.S.

So what is it all about? It clearly defines that the indsutry is bereft of the knowledge and real life application for those calling themselves 'financial 'whatevers' (which actually is most RIAs and insurance agents.)

It's not very nice to just about anyone or any entity primaril becuase of the nil education of finanical 'whatevers'- and that includes CFPs, CPA PFS etc. Regulators are asleep at the wheel.

These are the present reqjuirementsa to act as a fiduciary. But they are not in place now nor probaably will be in the future unless radical steps are taken to upgrade a sophomoric industry.

Errold F Moody Jr

PhD MSFP LLB MBA BSCE
Life and Disability Insurance Analyst
REgistered Investment Adviser


1 Literacy and Aliteracy ............................................................. 1
2 Basic Education ....................................................................... 7
3 Finance Theory ...................................................................... 13
4 How Statistics Can Lie .......................................................... 31
5 Past Success as a Guide to Future Performance .................... 35
6 Cognitive Impairment, Investor Disassociation With
Reality and How Marketing Can Misdirect Consumers ....... 45
7 Ethics, Integrity, Legality, Licensing, More Marketing ........ 57
8 Governmental (In)Competency, Organizational Lies ........... 75
9 The Significance of Being a Fiduciary? ................................ 87
10 Fiduciary Duty to Seniors ..................................................... 95
11 IRA Fiduciary ...................................................................... 103
12 Consumer Risk Questionnaires ........................................... 105
13 Diversification ..................................................................... 117
14 Beta and a Lot More of Real World Failure ........................ 125
15 Investment Correlations ...................................................... 131
16 Standard Deviation, Volatility ............................................. 141
17 Risk of Loss ......................................................................... 149
18 Risk, Probability, Timing, Consequences ........................... 153
19 Inverted Yield Curve ...........................................................
20 Year Over Year Real Gdp % ............................................... 163
21 Dollar Cost Averaging (DCA) ............................................ 167
22 Dollar Cost Averaging Down (DCAD) ............................... 173
23 Rebalancing ......................................................................... 177
24 60/40, 70/30, ??/?? Allocation ............................................. 183
25 Current and Retirement Budget ........................................... 189
26 Retirement Analysis ............................................................ 197
27 The Fallacy of Retirement Annual Withdrawal
Numbers .............................................................................. 205
28 Securities Arbitration .......................................................... 211
29 Real Estate ........................................................................... 219
30 Men Versus Women ............................................................ 225
31 Uniform Prudent Investor Act ............................................. 229
32 Insurance and Annuity Overview ........................................ 237
33 Term Insurance .................................................................... 247
34 Universal Life ...................................................................... 253
35 Annuities ............................................................................. 259
36 Indexing ............................................................................... 265
37 Long Term Care Insurance .................................................. 273
38 Life and Viatical Settlements .............................................. 285
39 401ks ................................................................................... 289
40 Conclusion ........................................................................... 301
Appendix ...................................................................................... 307

[Stephen Winks]

Errold,

This is why you are held in the highest regard. You Steve Drozdeck and Ron Rhoades need to talk.

Would love to have a copy to review.

With your permission I can send it to several key people in the industry who are interested in the professional standing of the broker and adviser.

SCW

[WinchesC]

When it comes to political impact, there is strength in numbers. And yet, "we" continue to splinter into groups along the lines of our particular specialties. I believe the big picture question is why do "we" need another trade association? Whether a CFP, an RIA, or a professional in the life insurance industry, those of us committed to doing the right thing for our client are the ones who will take the time to be involved on Capitol Hill and our state and local politics.

I just returned from the NAIFA Career Conference, where about 2000 professionals made time to represent the interests of the rest of the group by visiting nearly every Senator and Congressmen in Washington, DC. The legislative staff gave briefings on all the hot topics of which we need to be aware, and their analysis and synopsis was the best I've seen or heard. Our national president testified before Congress during the week, as well. Why can't we all get behind this leading organization that has been around for eons, combine our resources to represent the largest constituency possible, and minimize the confusion in the marketplace about who we are and what we do for our clients? It would save us all a fortune in dues and yet provide more monetary support for a top notch staff, make our membership more diverse (so we could debate those issues on which we disagree before we go before legislators), and we could be much more effective in lobbying efforts by combining our numbers and our expertise.

Perhaps, we could even be more effective in the identification of those elements of the industry that give us all a bad name.

[Stephen Winks]

WinchesC,


You are absolutely correct, well said.



Even our trade associations are compromised by their brokerage industry funding sources which prefer brokers not to be held accountable for their recommendations or responsible for fulfilling their ongoing fiduciary duty of loyalty and care to the consumer based on objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters.



We must find a way to make advice/fiduciary standing safe, scalable and easy to execute and manage without denigrationg 800 years of common law.


The brokerage industry is opposed to broker accountability and responsibility and has coopted our trade associations to support positions counter to the best interest of the consumer and adviser.



SCW

[the observer]

"We must find a way to make advice/fiduciary standing safe, scalable and easy to execute and manage without denigrationg 800 years of common law"

800 years from a 350+ year old country... WOW!

But then, the United States was alone responsible for the defeat of the Nazis and the demise of communism so I guess anything is possible... O.K. the demise of communism is a stretch since they own America right now but still... I hope th sarcastic inference to exaggerated statement is not lost in all the patriotic chest thumping.

[Stephen Winks]

The observer,

FYI, The US legal system is based on common law.

When it comes to fiduciary standing our legal code even has the same section references as that of the Brittish Commonweath countries such has Australia, New Zealand, etc.

SCW

[the observer]

Stephen,

FYI, I know... but they certainly didn't take anything in terms of case law over and fiduciary is still not well defined, nor universally applied in England or other Commonwealth countries. In fact, contrary to your opinion published here a year or so ago, Great Britain does not enforce a "fiduciary" duty on insurance agents.. I happen to be licensed throughout the EU in insurance and as an investment adviser as well and you forced me to obtain that information from the Public Information Office of the Financial Services Authority after making some rash and overly zealous claims here. I don't mind you waffling on about "fiduciary" but try to be factually accurate when it comes to other jurisdictions.

[Stephen Winks]

The observer,

England holds brokers to the fiduciary standard of care. It is my understanding, that insuanace agents are as well, which has resulted in a significant number of english insurance agents leaving the business before they would actually be required to act in the consumer's best interest. This is per the AXA/Equitable Life Insurance Company.

Could you be mistaken?

SCW

[B Smith]

Winches,

I respectfully disagree. There is no safety in numbers. There is safety in political contributions and being at the top.

Who writes the laws? The millions of self-employed and small business owners, or the handful of dominate companies?

Companies even the size of National City Bank had no choice what the larger companies were to do to them during the bailouts. A maybe, what, top 10 sized bank? And you think if the bottom 1,000s of banks joined forces they would have more say than 1 JPM Morgan?

We are never going to make one iota of difference, certainly not in our lifetimes, while talking about a profession that includes JPM, BAC, and others.

We could make a difference as a group that does something different. But not through legislation. Legislation will only try to keep us under the thumb of other groups.

We need to stop the madness of shouting 'please regulate us more' and realize we are already held to appropriate standards, or choose to hold ourselves to those standards through the groups and designations we hold.

As I said you need money, and you need to be at the top. You don't advance your cause without both. You don't get to the top anymore, the progressives of the early 20th century determined competition was a sin, and you won't compete on their turf. You need not to play their game.

[the observer]

Stephen... ER... NO, I'm not wrong, YOU ARE... unless you can come up with something better than from an insurance company. I'm not regulated by an insurance company in England, but by the FSA. I'm not regulated in Germany and Austria by an Insurance company, but by the Börsenaufsicht and various Bundesministeriums für Wirtschaft und Finanz regulations as well as Bundesaufsichts Amtes.

1. In the UK, My information comes directly from the "Financial Services Authority", the UK regulator and its FSA handbook. The Financial Services Authority (FSA) is the regulator of the financial services industry in the UK...

http://www.fsa.gov.uk/

2. The rule making and guidance regarding my registrations in Europe come from the FSA Handbook.

http://fsahandbook.info/FSA/

3. Rules relating to FSA registered financial advisers and insurance sales certainly contain phrases such as: "A firm must conduct its business with integrity. A firm must conduct its business with due skill, care and diligence. A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. A firm must observe proper standards of market conduct. A firm must pay due regard to the interests of its customers and treat them fairly. A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client. A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment."

All this clearly demands a suitability, reasonable standard of care and fair and equitable business practices standards alá FINRA Broker regulations but the word "fiduciary" is rarely mentioned and certainly not in the context of duties owed to a client... Broker/Dealer firms do have a fiduciary responsibility when they "custody" assets and when they transfer assets to a "third party", but then, so do FINRA regulated broker dealers...

NOW, that said, I'm always open to being put in my place so please take a long while, as I had to years ago when I became registered to conduct business throughout the European Union, read through the entire FSA handbook (don't forget to read only the portions that are current and relevant) and then quote paragraph and verse for me on where in there it tells a broker or insurance agent that he's a "Fiduciary"...

If you find anything that makes a broker or insurance agent in England a "fiduciary" to the client, please post it here and I'll be happy to not only learn something, but I'll go even further, I'll even thank you for updating me about something I didn't know.

If you can't find anything, then please stop talking about 800 years of common law. It's all nonsense. When I sold my first limited partnership and Unit investment trust in the United Kingdom in 1971 I didn't even need to register with anyone. I went to a sales meeting one night, learned about UIT's and went out the next and started selling. I couldn't spell fiduciary back then and neither could any of the guys in the office.

BTW, One of my old buddies (now a State Senator in Austria) dropped AXA years ago thanks to its history of complaints... that particular company is not exactly gold standard in my opinion. Anyone can write a manual... it's the customer complaints I look at... If you're interested and can speak German, go run a Google search under google.de or google.at and use the search term AXA Beschwerden in Österreich or AXA Beschwerden in Deutschland. They may talk the talk... assuming you have some language from some document of theirs to copy paste, but they certainly don't walk the walk.

All this said and because I'm not trying to feed the troll in you... Your assertions regarding fiduciary have some merit in a very narrow area IMO, that of ERISA Fiduciaries dealing with qualified plans... although the case law is limited to way less than the 800 years you claim and way less than the 350+ years this country has been in existence.

Rather than just slam you though, I'd "respectfully" request you stick to stuff you actually do know something about in areas you do provide guidance about to investment firms, and not make these massive over generalizations that are just false and misleading.

[B Smith]

Small bankers used to spend 5% of their time on regulation; now they spend 30%

http://finance.yahoo.com/video/cnbc-228 ... r-26624151



You have no chance to legislate your point-of-view. Imagine instantly requiring you quadrouple your annual regulation expenses.

NOW, imagine you are even a success company and you get on their list. How about if you were a Gibson Guitars (google it). Or Rawsom Foods (google it). You are out of business.



"Regulators are very strict."

"No. They're insane."


Stop itching for requaltion.

"You're so worried about the big guy, you're killing off the small guy... I call this the Bonnie-Clyde bill."

Etc, Etc, Etc; watch this video, this is the future. It is critically important, through the end. You, me, we all will be working for Ameriprise if we continue this path.

[Bradly T.]

A quote from our first president....."Government is not reason; it is not eloquent - it is force. Like fire, it is a dangerous servant and a fearful master."


And while I agree wholeheartedly with Mr. Moody's claims and concerns regarding the lack of expertise of practitioners, I have two issues to raise. The first is that there is no such thing as "Financial Planning Fiduciary Standards under Dodd Frank" - his CE textbook title. There are advisory standards and the harmonization effort for a singular BD/rep and RIA/advisor obligation. There is no financial planning fiduciary standard - except for the PFS, ChFC, CFP, CPA, and trustee standards - and Dodd/Congress has rejected (as they should) the comingling of these disparate disciplines of planning and investing. It appears that like the Noncoalition, Mr. Veres, and Mr. Winks, Mr. Moody believes planning is an element of investing rather than the opposite fact and reality. Love the course material.....the title is way off base though. The course work doesn't seem to address cash flow, cash reserves, debt, risk transfer (except for LTC, annuities, and Life insurance), martial estate organization, proper asset ownership, or most other CRITICAL elements required for ANY treatise on planning.



Second, I have concerns that the required expertise he suggests could easily result in financial services ending in the same mess as our medical system.....the most expensive and least accessible and rated lower in quality than Cuba. I want my cardiologist to be top shelf.....but I don't need a cardiologist for the diagnostics needed to recommend a cardiologist or for my flu shots thank you. The medical profession has many levels of licensing and skill requirements but it doesn't provide enough primary care by less licensed and it effectively reduces the number of licencsees to keep that $500k base income line intact by lack of supply in a high demand environment....artifically and shamefully acting against the best interest of the public. Should we do the same? Should we increase the entry barriers? Or require more meaningful and greater professional development education and credentialing over time and progressively? Or have more specialized practitioners? Don't know the solution....but I have real problems with any device that reduces choice, access, competition, and the democratization of services for 90% of Americans. Will more regulation actually deliver more ethics and expertise? I prefer Mr. Moody's call for greater education for all practitioners and higher standards of expertise by some format that has demonstrated efficacy.......I don't believe that's federal regulation or oversight historically speaking.

[Bradly T.]

I am truly surprised by the lack of understanding by some about the nature and the value of financial planning. It seems to becoming something it's not and never should become......a future outcome forecast. Planning is NOT a future outcome forecast and, frankly, there is no such thing. Planning is a tool and process for diagnosis and evaluation of the current financial "condition". There can be no "planning" without adequate diagnosis FIRST. To further abuse the medical metaphor - prior to lab tests, treatments, and surgeries comes comprehensive diagnostics. The evaluation process is what determines all other recommendations and referrals to specialists based on the results of diagnostic process.


You determine height and weight (think equity to debt ratio) and blood pressure (think cash flow - positive/negative) and resting heart rate/lung function (think cash reserves and savings rate) and eyes/ears/nose/throat (think protection/insurance portfolio/tax return); this provides a baseline for future relative improvement or decline measurements. Now, and not until now, do we begin to determine status or treatment options. Preliminary results will almost always lead to additional analysis to address two primary - but very different - needs: general improvements in overall health (seems to always include reduce calories, exercise more, take vitamins, etc. - or spend less, save more, reduce debt) and risks identified for further analysis.


A financial planner now has a detailed net worth and cash flow statement, critical financial ratios, ownership and beneficiary designation/registrations, insurance portfolio, estate docs, tax returns, payroll and benefit statements, and an understanding of client concerns, priorities, time frames, and desired outcomes (correctly called goals by soccer and hockey enthusiasts and incorrectly so by investment advisors - it is not my "goal" to die but I do have "desired outcomes" if - excuse me, when that happens). Only the intake and interview process, so far, requires ANY expertise. The data is simply data - now organized for critical analysis which does require expertise.



Now, some training and some software should allow the planner to determine three things: which issues need attention and improvement; what general strategies should be considered; and what type of expertise will be required to specify the details of each strategy. General discussions of risk-gaps and strategic options with the client should result in referrals to the expertise and licensed professionals needed to verify and implement the options selected by the client. These may include insurance agents, CPAs, HR, banker/mortgage broker, attorney, investment advisor, and others where the planner is NOT licensed to legally operate or is not proficient enough within their legal licensure.



Those planners who are licensed and qualified to provide financial, tax, insurance, and/or legal "advice" may also implement one or more strategies identified by the planning process. But planning is NOT about "advice" or "implementation" either one. It is about measuring risk to desired outcomes and identifying sound strategies that the risks indicate and helping clients understand BOTH the risks and the strategies. Good planning then requires frequent updates in data to identify improvements and measure progress over time and adjust strategies based on changes to client priorities and circumstances and time frames.



Advice and implementation of that advice are NOT part of the professional financial planning process - just as brain surgery and chemo are NOT part of medical diagnostics or regular physical checkups. Sorry Mr. Moody but I think you have a very different idea what planning is and what qualifications are really required to provide value and benefit to clients through its process. Naturally, the better the experience and skill of the diagnostician the better the patient (client) experience and results. It is rediculous to propose that expert financial planners must also be experts at insurance, law, taxes, securties, loans and debt, etc. to be qualified or effective planners.



The difficulty of financial planning lies in understanding the diagnostic reports and the client situation and the strategies different risks/situations require. A family with a net worth of $10mm in a third marriage with 4 different sets of inter-related and unrelated children - one with special needs, one spendthrift and one to be disinherited, where one spouse is a legal resident immigrant and the family owns a corporation (or 3) in 2 countries with off-shore accounts is a little more complex than an only marriage couple with a $1.5mm net worth and 2 children and no debt. Can a planner who is not qualified for scenario #1 be qualified for scenario #2? Hell yes. Education, experience, mentoring, advanced case support, and a senior planner could also make the less qualified planner capable of managing the planning process for scenario #1 too!



I've always loved group case studies. It is fascinating to hear all the different approaches to the same/shared problems and watch the critical thinking process others apply to problem solving. Creating equations and identifying variables, substituting variables, identifying strategies where multiple solutions come from one strategy, finding the new risks created by solving original risks. Playing "What If?" and "If that, then this...." looking for the overlooked and the unintended consequences of the "solutions". Cool. Very cool.



So why does Bob Veres and the Noncoalition and Mr. Moody all agree (incorrectly) that financial planning is about portfolio construction and security selection when neither of those disciplines has ANYTHING AT ALL to do with planning? Damn good question. I certainly didn't invent the process, elements, and discipline of financial planning....everything I know about planning was learned from other planners over a long, long time and formal education about Planning. These folks aren't dumb....so what's their angle? Why misrepresent? Why use one term when you clearly mean another? It's really no mystery. They are all selling something or stealing something or could it really be they're so misinformed...... or just dumber than a sack of hammers??



Apologies to all financial planners for this 1st grade primer on planning but apparently there are those who just don't seem to know what we do or how important it is. Thanks for your patience.

[Bradly T.]

Just finished reading a fascinating op-ed from the Journal of 1990 (Thinking Like A CFP) in which the author, an attorney and CFP, decried the duplicity precisely demonstrated here by Bob Veres - co-opting the discipline of planning and role of planners by the investment advisory community (as in this case).....and the BD community.....and insurance community......and legal and tax communities.....and he warned of the poisenous and cancerous effects such "leadership" and community "voices" bring to our fledgling profession (if growing discipline). The author was adament that real financial planners in real practice helping real people with diverse and specific/multiple needs, with the real process NOT ALLOW such bullsh*t to go unchallenged or unpunished. He also says emphatically that real planning is NOT about advice or implementation but has been hijacked by RIAs, BDs, and agents for their own purposes. And he acknowledges that all those models are improved and deliver better client outcomes BECAUSE of the planning elements and process applied and that planners should become critical to every financial, tax, risk, and legal profession because of the power and uniqueness of PLANNING. He also showed understanding and empathy with the reality that a living must be made.....even by financial planners......but those of us true to the power and process and who apply the full, comprehensive process to everyday life for our clients will do the right thing. The form of compensation does not define the ethics or the expertise provided by the planning practitioner. It is NOT about AUM or sales or fees or commissions - these are simply false divisors and mere preferences for compensation.


But planning is far more.......or should be; whether paid by hourly billing, AUM fees, and/or commissions on products does NOT matter nor does it preclude or define a fiduciary status for the planner RELATED TO financial planning. The fact remains that comprehensive planning as a professional process/discipline MUST deliver FAR MORE information and help and direction to our clients than merely determining insurance needs, portfolio allocations, or ANY OTHER individual element therein. If any "planner" does NOT perform planning but simply prostitutes the name for marketing promotion and self dealing - INCLUDING AND ESPECIALLY RIAs (a direct fraud and violation of ANY definition of fiduciary) - they should be exposed as the frauds they are.



Bob Veres is both a liar and a fraud if he claims that only RIAs are professionals and if he continues to interchange the terms financial planning and investment advice as one and the same (or even freakin similar!). He is claiming (and so is Mr. Moody and the Noncoalition) that planning is about portfolio allocation and security selection - THAT IS A DAMNABLE LIE and a treacherous and traitorous position to have. Where are the voices of real financial planners?? Why do we allow the treasonous liars and thieves to "represent" us to Congress and the public when they prove, over and over, that they do not respect us or our process, when they attempt to steal our profession and give it over to the SEC (evidently a hot issue in 1990 too!), when they even try to change the very meaning of the term - planning?? FPA, the CFP Board, Financial Planning magazine, and many other so-called leaders and voices are quickly becoming the greatest enemies financial planning ever had. They are not of us and not for us any longer.....obviously. Mere whores for big money.....securities money, dirty money. They have sold their souls (cheaply)......will we?

[efmoody]

I understand what you say but disagree in real life terms. Financial planners, like it or not, have not only the responsiblity to doing the planning but have become the designee to the selection of what is supposed to work after the plan is completed. They have to take the responsibilty since brokers are not taught the fundamentals of investing and I bet nary a reader grasps the insurance understanding of GWAB, GMIB, indexing et al.

Unfortuanately, those as FPs don't have the requisite skills either. Until and unless such time arises that they are truly knowledgeable on what they say they can do, then no one can say they can.

And while I have done some stuff for higher end, my focus is for the average citizen who is getting screwed by brokers, agents and FPs. But if the average person is underserved, I submit so are the affluent. If someone wants a dialogue, they are going to have to show me some acceptable background. Words don't cut it from CFPs et al. You have to have attained a formal education in the area before you can beat it down

[Bradly T.]

Well, your opinion seems to be shared by both illustrious and notorious folks in the business....but I still disagree. How can you (or anyone) claim that ".....like it or not...(planners) have become the designee to the slection of what is supposed to work after the plan is completed"?? Nonsense. Must planners also write the estate documents? Must we design and sell the life insurance? Must we complete the HR benefit election form at work? Must we open the account for client's bank cash reserves? Must we sell the liability umbrella we recommend? The car insurance? The health insurance? Medicare supplements? Complete the tax return? Must we recapitalize the S corp to issue nonvoting shares to family for estate distribution? If NOT, then WHY are planners the "designee" for investment advice and security selection? Preposterous......and erroneous both.


When did planners become "designees"? No one notified me I needed to pass the bar, become a CPA, get securities licensed, be a P&C agent, not to mention life, health, etc. to be a planner. Frankly, I don't even need my CFP or ChFC for planning and I do NOT need ANY of those professional licenses.....except for those in which I practice and provide advice for a fee. Even then I am NOT required to act within or on behalf of any other professional license unless and until I cross a clear and well defined legal line. Planners are diagnosticians first......determine the financial condition of the patient/client. Next, we are researchers and educators in the effort to educate clients about risk forms, risk exposure, and common strategies available to address those risk "gaps" discovered in diagnostics. We get clients focused on the proper priorities and alternative, multiple solutions (and THE RISKS inherent in those "solutions" as well).



Planners then oversee (many have called it quarterback) implementations and interact with those properly licensed professionals in charge of implementation. You're claiming that the quarterback must take the snap, make the block, run the pass route, throw the ball, and catch the ball.....or he/she ain't the quarterback. Balderdash sir, poppycock. Can't imagine what you're thinking. Now, I KNOW what the Noncoalition is thinking and I KNOW what lies Veres is printing, but I can't imagine anyone would agree with your position. Financial planning has NEVER been any required element to any form of investment advice or management....never - not even for so-called fiduciaries. And being an investment professional - good, bad, or otherwise - has never been any requirement for planning.



I remain a firm supporter of your call for greater expertise for ALL practitioners, including planners and securities pros and insurance agents, and lawyers, and accountants, et al. But your newest tome is badly mistitled (please provide ANY financial planning fiduciary standards related in any way to Dodd/Frank) and your views on what planners do and the value they provide are misguided. I say so with all due respect. As I said, the weight of those on your side is daunting and fills me with self doubt...but I've been at this a long, long time....there's no historical basis for your claim and the others have axes to grind and self dealing to protect - I doubt they support the need for a planner to be lawyer, CPA, insurance specialist, etc., either - they simply want the SEC in charge of planners for their own nefarious reasons. I believe you are ernest and NOT self dealing or lying for your own benefit like those who agree with you. (Except M. Kitces whom I also respect but cannot understand his belief that only the SEC can deliver a planning profession which would be the END of any potential profession in my opinion.)

[Bradly T.]

spam bump

[Bradly T.]

forgive me doing the site managers job (if there was one) - spam bump

[Bradly T.]

Let's let the President of NAPFA say a few words about HIS future!! He is far more relevant than Bob Veres....if just as honest.

[Bradly T.]

It appears that FSI is the most effective organization regarding "Who Speaks For the Future". Indeed, right or wrong, they have been on the winning side of every fight they've picked so far. Why? They actually represent the interest of indie BDs, dually registered reps/advisors, or basically - The Little Guy. How does David get heard over the behemouth Goliaths? Damned if I know....but I am impressed. DC is listening to reason and FSI is delivering reason and compromise and pointing out unintended consequences and representing access and choice for the masses....you know, the unwashed and unwanted by big RIAs and Wirehouses. They have found a way to choose neither of the two losers in their war for turf, control, and influence. Best 100 bucks a year I spend. Surely they will disappoint or lose issues or my interests and my indie BD's will diverge (and they pay much higher dues than me). But so far so good. They also support a stronger fiduciary standard for us indies and dualies.....of course we have the greatest percentage of CLU, ChFC, CFP, CPA and related consulting and planning creds and provide the widest spectrum of both financial products and services to the greatest number of client households with the smallest average account balances and screwing the fewest number of people by choice and competence - no, NAPFA is NOT represented here.


Now are they pristine and lilly white innocent? Ha Ha....this is politics and money we're talking about here. I'm no insider and don't know the players. All I know is they're helping me and my model survive the insanity proposed by Veres, Winks, and the noncoalition all. If interested go to www.financialservices.org (that's right .org) - lots of good info without membership or dues required. Wanna know who's trying to screw you? Wanna fight back? Please don't mention my name, they don't know me.....I mean, they cash my check and send me 3 updates a week but......

[Bradly T.]

Now that NAPFA has been exposed as the home of the fiduciary mafia and the FPA and CFP Board have resigned to them and the SEC, who WILL represent our discipline and potential profession to other industries and the public? Who will start a group truly representative of the collective experience and group wisdom we have paid so dearly for? Any organizers out there? Please...no spokesperson needed.....no leader needed. Just a little integrity and organization for our collective voices and benefit.

[Bradly T.]

I can envision an organization that promotes planning and planners to all related financial services industries alike and equally.....CPAs, bankers, trustees, estate attornies, insurance and securities industries.....ALL. A group that recognizes multiple PLANNING credentials in a single big tent. Maybe even a super credential that grandfathers others for membership but requires even more experience and education and demonstration of expertise. Maybe a group that truly surveys member's positions on multiple issues and gives voice to any issue or position that garners 2/3 of member support (unlike the CFP Board's 6% "petition" fraud recently). One where the members determine priorities, strategies, tactics, et al. One that remains apolitical and seeks consensus about how to be better planners and better appreciated and focuses on employment and career development for our growing numbers.

[Bradly T.]

Oh yeah.....and costs less than $100/year.....and has a small office no where near Wall St. or DC and doesn't sponsor sponsored events or peddle products or has a PAC. You know what I mean. An organization truly dedicated to the formation of a recognized profession....one planner and one client at a time, building influence by positive results and impact of the discipline and not the disciples or their lawyers or marketers.