Chemistry and Credentials

I am always doing that which I cannot do, in order that I may learn how to do it.
--- Pablo Picasso

Most of the advisors I meet are "old" (46+ this year, 47+ next year,...). It's a pleasure to meet younger advisors in their 20s and 30s. Such contagious energy and enthusiasm. Such promise.

How can younger advisors succeed in today's competitive world? Chemistry is certainly an important part of selling. So are credentials.

Which Ones?
Credentials are really brands. Here's what I've encountered among advisors: ASC, BA, BSc, CA, CFP, CGA, CMA, CH.FC, CIM, CLU, CMA, EPC, FCIA, FCSI , FLMI, FSA, LL.B., MA, MBA, MSc, PFP, RHU, TEP. That's quite a list. Some of designations are explained on the Advocis website and the Riscario wiki.

What are the most common designations? For advisors in the lower end market (annual premium under $10,000), the answer is "none" (no designation at all). In the affluent market, I see CFPs and CLUs. Is there a lesson here?

More important than the designation is what you become while earning it.

Best Path
Here's the best path for newer advisors, a CFP followed by a CLU.

The CFP (Certified Financial Planner) establishes credibility and looks like the entry level designation for serious new advisors. At Fanshawe College in my hometown of London, Ontario offers a program to prepare students for their CFP examination. Other colleges may too.

The CLU (Chartered Life Underwriter) builds and demonstrates your expertise.

For additional specialization and differentiation, there may be value in

• RHU (Registered Health Underwriter): since Canadians are worried about critical illness, disability income and long term care
  
• EPC (Elder Planning Counsellor): since Canadians are aging and those age 55+ have unique needs

At some point, stop. Business card have only so much space.

How is education supposed to make me feel smarter? Besides, every time I learn something new, it pushes some old stuff out of my brain. Remember when I took that home winemaking course, and I forgot how to drive? --- Homer Simpson

Why Now?
The best time to earn credentials is shortly after graduating from college or university, while you're working. You'll still have the discipline to study. Your employer may pay for your courses and pay you more upon completion.

There's an added bonus. When you're studying, you don't have time to spend. So you can build up a financial nest egg at the same time.

How Accountants Feel About Insured Tax Strategies

Americans like to make money; Canadians like to audit it. I know no other country where accountants have a higher social and moral status. --- Northrop Frye

In financial services, accountants are the most trusted financial advisors. In today's specialized world, few accountants understand the many creative ways that life insurance can be used to reduce the financial risks --- including overpaying taxes. So our proposals don't get endorsed. Our clients (and theirs) lose.

Here are thoughts from recent discussions with accountants.

What Accountants Say
At 13 letters, 'life insurance' is the longest 4-letter word. There are many negative connotations. Since advisors are paid on commission, there's automatic skepticism about the solutions. Whose best interest is being served?

Accountants see themselves as professionals. They worked hard to get their accreditation. They want to deal with other professionals. Advisors who lack credible designations (e.g., CFP or CLU) face tougher challenges.

His card says 'executive' but it mumbles 'just a salesman'.
--- Jane Siberry, Extra Executives

When the words 'tax' and 'insurance' are used in the same sentence, the client's turn to their accountants for advice.

My money goes to my agent, then to my accountant and from him to the tax man. --- Glenda Jackson (actress)

Clients want aggressive recommendations. Accountants acknowledge this. But they're busy and learning about insured tax strategies takes time.

As we know from Investing 101, with risk comes reward. When asked to endorse insurance strategies, accountants face risk but where is their reward? So what is their incentive for taking the risk?

The Result
For insurance tax strategies --- directly or indirectly --- accountants often find it's safer and easier to say "no". Which is what their clients probably expected.