Tuesday, February 8, 2011

Investor Coach vs. Financial Planner

I read trade publications from the financial services industry from several different sources. Some of the publications that I read to stay on top of things are:

The Journal of Financial Planning
Financial Advisor Magazine
Investment Adviser Magazine
Senior Market Advisor
Futures Magazine
Benefits Selling Magazine
Journal of Indexes
The Register
Life Insurance Selling

I also read information from blogs such as:

fi360 Blog
RIABiz Today
Calculated Risk

I also subscribe to Bob Veres' newsletter entitled, Inside Information which is a fabulous read for people in my industry.

The point that I wanted to make is that I am on top of what is going on in the financial services industry.

I have noticed an unfortunate trend by some to abandon calling yourself a "Financial Planner." In addition, they have begun to try and discredit Financial Planning and Financial Planners altogether. It is in investors interest that this effort does not succeed.

You see, if you call yourself a "Financial Planner," then you are regulated by either the states that you do business in or the United States Securities and Exchange Commission (SEC). You have to be registered as an Investment Adviser Representative and affiliated with a Registered Investment Adviser in order to use the terminology of offering "financial planning services," "financial plans" or calling yourself a "Financial Planner."

Something that bothers me is that as long as you are properly registered, then you can call yourself a "Financial Planner" even if you do not hold the Certified Financial Planner™ license like me. This is ridiculous in my opinion, but I will save this argument for another day.

If this fact is not bad enough, I am now seeing a trend towards Investment Adviser Representatives and Registered Investment Adviser firms shifting away from using the "Financial Planner" title. As a mentioned earlier, they have resorted to bashing the designation and are proclaiming that financial planning is dead. They have discovered something new. Something fashionable. Something that lends them credibility in the world of advice. This new term is "Investor Coach."

Investor Coach? I wonder what the qualifications are for you to call yourself an "Investor Coach?" None. That's right. None. Nada. Zilch.

You may be asking yourself, like me, what's up with this? Almost every state has rules revolving around the misleading use of financial designations. You may have heard in the past that there were significant problems revolving around the use of senior designations. The states nipped this activity in the bud by passing regulations to ban the use of designations that did not meet certain national standards. The states did a good job in this area.

However, the people touting the use of "Investor Coach" have apparently found a regulatory loophole. Since, "Investor Coach" is not a professional designation, it is not subject to the state regulations. Pardon me, but I beg to differ.

I believe very strongly that if an advisor suddenly becomes an "Investor Coach" without any training from a nationally accredited institution and no continuing education requirements, then he or she is being misleading to the investing public.

Calling yourself an "Investor Coach" is no different than calling yourself a "Senior Advisor." There are no qualifications around the use of "Investor Coach," nor are there any continuing education standards. Therefore, from my compliance viewpoint, it is easy to see that using the term "Investor Coach" is a violation of most every states regulations for financial service professionals.

Are you using this terminology in your financial services business? If so, then I would advise you to quit doing so immediately.

So, let me ask the question to potential investors. Would you rather work with an "Investor Coach" who is skirting the rules or a Certified Financial Planner™ who is regulated and abides by the rules? If your "Investor Coach" is skirting the rules on the use of misleading designations, then it kind of makes you wonder what other rules are they skirting? Just a thought.

Be careful out there.