Archive

BIG FIRMS SEEKING TO MAKE THEIR MARK THROUGH CFPS: PUSH BY SCHWAB, AMEX, ETC., COULD BOOST PLANNER MERGER

The proposed merger of the two largest financial planning associations this year may usher in the era of…

The proposed merger of the two largest financial planning associations this year may usher in the era of the corporate CFP.

From Charles Schwab Corp. in San Francisco to Metropolitan Life Insurance Co. in New York, major brokerages and insurance companies are putting more emphasis on having their employees and associates become certified financial planners – betting the designation will help foster a public image of acting in the best interests of the consumer.

Schwab, for instance, plans to start by midsummer a program that refers clients to select CFPs for comprehensive financial planning.

And Prudential Insurance Co. of America in Newark, N.J., over the past year has begun requiring new planners – it’s hired 800 so far – to earn their CFPs.

American Express Financial Advisors Inc. of Minneapolis says the CFP designation increasingly is what it pushes. Of its 9,200 advisers, 2,727 have CFPs while only 556 have ChFC and CLU credentials, according to Mark Patridge, vice president of sales training.

“More and more,” he says, “the CFP is the designation of choice for us.”

That sort of institutional thinking could benefit the planned merger of the Atlanta-based International Association for Financial Planning, which has 17,000 members, and the Denver-based Institute of Certified Financial Planners, with 14,500 members.

If the merger is approved, all members of the new Financial Planning Association’s financial planning division must hold a CFP within 10 years. And only members of that division will be able to receive consumer and media referrals from the organization.

A stronger corporate presence could help the new group’s bottom line, expanding its political and marketing clout. The institute generates about 20% of its $5.5 million budget from corporate exhibition fees and sponsorships, while the association is slated to take in $1.2 million of its $8 million budget from its corporate division, which includes big-name Wall Street firms such as J.P. Morgan & Co. and Bear Stearns Cos. Inc.

Jim Gartin, director of account representative training at MetLife, believes the planning groups’ merger will spur more major financial service companies to push their representatives to get the CFP.

“More of our people now are getting involved in financial planning than in direct life insurance sales,” Mr. Gartin notes. “They’re getting into markets that they wouldn’t have in the past, such as estate planning.”

MetLife for two years has required its financial planner agents who use its internal training program to be CFPs or be progressing toward earning the designation. Of 7,000 MetLife agents, 500 are in the program this year, up from 300 last year.

In the past, the insurance industry designations of chartered life underwriter and chartered financial consultant were the most popular. MetLife now sees more interest from agents who want to pursue the CFP.

“To survive in this industry, we recognize we have to move in that direction now and hire a more quality person,” Mr. Gartin says. “The public recognizes it. This is the feedback we’re getting from our agents.”

Salene Hitchcock-Gear, vice president of planning products at Prudential, agrees.

“(The CFP) is the most recognized credential to consumers,” she says. “That has definitely changed. As we’ve moved out of the insurance focus, we need to get the appropriate credentials. The CLU and ChFC, they don’t necessarily carry a lot of meaning to consumers looking for financial planning expertise.”

At Schwab, the plan is to have its AdvisorSource Financial Planning system in operation throughout the country by early July. The new system will refer Schwab clients who want comprehensive planning services to about 150 fee-only CFPs who are paying the No. 1 discount brokerage an average of $8,000 each for the referral service, according to Edward Rodden, senior vice president of retail marketing.

gotta have a plan

“We have not been a firm that most investors thought of to come to for advice,” Mr. Rodden says.”It’s required us to rethink in many ways what is good investment advice. . . . The first thing that’s important is for people to have an investment plan, whether it’s simple and intuitive, or an in-depth comprehensive plan drawn up by a CFP.”

Schwab has been operating a similar AdvisorSource Investment Management program for more than three years, which refers clients to about 450 investment advisers, regardless of designation, who provide money management services. In 1998, that program brought in nearly $1.75 billion in assets to Schwab, and another $587 million rolled in in the first quarter of 1999, a 69% increase over the first quarter of 1998.

At Teachers Insurance and Annuity Association-College Retirement Equities Fund in New York, the nation’s largest pension fund with more than $200 billion under management, Joanne Bickel, manager of participant advice, says the company doesn’t promote the CFP over other designations. But she has watched the industry evolve toward the CFP.

“It makes you aware you are helping people make a decision about their finances; it’s different from selling a product,” she says, adding that TIAA-Cref employs about 350 CFPs.

merrill is for M, as in cfm

Ms. Bickel thinks the merger will further push the industry in the direction of the CFP mark. “A lot of companies push their junior officers to get the CFP and this should enhance it.”

But not all big financial services companies are tilting toward the CFP, of course. Merrill Lynch & Co. Inc. of New York last fall entered an arrangement with the Denver-based College for Financial Planning to train their representatives to get the company’s proprietary certified financial manager – or CFM – designation.

The CFM program covers the basics of financial planning, but Merrill’s 15,000 brokers – now called financial consultants by the company – are encouraged to rely on Merrill’s specialists in such areas as estate planning, trusts and insurance.

“Our policy will remain the same,” says Janet Galvin, Merrill’s director of curriculum planning. “The merger doesn’t change it. . . . We encourage professional education.”

The 25 largest

employers of CFPs*

Acacia Group

A.G. Edwards & Sons Inc.

Allmerica Financial

American Express Financial Advisors Inc.

Cigna Corp.

Edward Jones & Co.

Equitable Life Insurance Co.

Fidelity Investments

Financial Network Investment Corp.

Investment Management & Research