Who should be allowed to certify top advisors? Sean Walters, chief executive officer of Investment Management Consultants Association, talks with associate editor Mason Braswell about how the organization's examination curriculum is changing to account for the evolving needs of high net worth clients and why certification programs in general will face increased scrutiny from regulators.

1. What's behind the recent changes in curriculum?
Investors and regulators are scrutinizing credentials and demanding more expertise from advisors. The bar for competent and ethical advice will only get higher. We completed a job analysis for private wealth advisors last year and just updated our curriculum for the Certified Private Wealth Advisor and Certified Investment Management Analyst certifications. Now a higher percentage of both programs focus on risk management, and they have also enhanced their behavioral finance sections substantially. It's about understanding the emotions of high net worth families and the human dynamics that go along with multigenerational wealth transfer. One issue in our industry is that the term "wealth management" is used fast and loose. It applies to working with high net worth families with $5 million or more in assets and requires knowledge of taxes, portfolio management, legacy planning and understanding vastly different client types.

 

2. How is demand?
We continue to experience positive growth in all of our programs. We surpassed 9,000 members a couple of months back. A surprising area of growth has been in independent advisors. Independent advisor teams are realizing they need a CIMA-certified advisor or CPWA specialist to continue to serve their client base as they grow.

 

3. Are there too many credentialing bodies now?
When the fiduciary dust settles, regulators will focus their attention not so much on the quantity of credentialing bodies in our industry, but on the quality. I searched the Bureau of Labor Statistics and found there are about 3 million nurses in the United States and about 200 nursing certifications. Looking at all the professionals and firms in financial services, there's easily more than 3 million people, and we have 150 credentials. The difference is that almost all those nursing certifications are accredited by a third party. You want to know that a credential means something and a credentialing body didn't just put those three letters after your name. Our industry lacks a commitment by certification bodies to go out and get their programs accredited and meet those third-party standards. There are really only two assessors of certification programs. One is the National Commission for Certifying Agencies, which accredits the Certified Financial Planner mark. The other is the American National Standards Institute, which accredits CIMA certification. Both are very good. That to me is where the crackdown will be over the next several years.

 

4. How are you looking to grow IMCA's role?
Too many of the big firms that used to be big recruiting shops aren't recruiting the vast numbers anymore, so that's going to accelerate the age demographic of advisors. People say everybody is getting old and the average advisor is 52, or they talk about recent college graduates. But the future is career changers in their 30s and 40s. And if I wanted to jump ship and go into investment advice, I wouldn't go back to school and get a bachelor's degree. Most of these firms have training programs to get advisors up and running for the first two to three years. Then they need that next step, which they can get with CIMA.

 

5. Could that help firms' retention?
Going through the CIMA certification program locks new advisors into their job for another year at least because they're in the CIMA program for 12 to 14 months. And a lot of firms have tuition assistance, but they usually require that the advisor stay for a year or two, or they have to pay back some of the tuition. It's a good way for firms to invest in their talent and human capital. Too few firms are making that investment for the future. All these competitive dynamics are going to kick in big time in the next three, four and five years, and firms have to invest in their people to be able to weather that.