* UBS exec sees no financial lift with CFP title
* Merrill says certified planners make more
* Number of certified planners up sharply
By Jed Horowitz
NEW YORK, June 3 Some of Wall Street's biggest
brokerage firms are at odds over the bottom-line returns of a
three-letter credential they are vigorously promoting to their
The CFP (for certified financial planner) title is conferred
by the nonprofit Certified Financial Planner Board of Standards,
which touts it as "the standard of excellence for competent and
ethical personal financial planning."
The insignia has become a popular addition to brokers'
business cards since clients were traumatized by the market
collapse of 2008. With consumer faith in brokers' investment
skills shaken - and commissions for simple buy and sell orders
slipping - brokers are positioning themselves as trusted
advisers that help clients meet goals ranging from saving for
college to estate planning.
Yet while some firms are pushing their brokers to earn the
CFP credential as a way of attracting clients and profits,
others say the bottom line benefits have not been proven.
Over the last five years, the number of CFP holders has
grown 23 percent to 68,0000, about half of whom work at the 50
largest financial services firms, said Joe Maugeri, director of
firm relations at the CFP Board. Firms pushing advisers to get
the license range Bank of America Corp's Merrill Lynch
to Charles Schwab Corp, which traditionally offered
little direct advice to clients.
Even firms that disdain working with people with less than
$250,000 to invest are pitching to wealthier clients with the
kind of college-and-retirement planning talk traditionally aimed
at the less well-to-do by insurance sales people.
MERRILL WANTS CFP TRAINEES
Merrill, the world's second biggest broker, last year began
requiring the almost 4,000 new brokers in its training program
to complete the six-course CFP study curriculum within three
years. It also gives pay incentives to adviser teams that
include a CFP holder and boasts almost 3,500 CFP holders among
its 14,500 or so financial advisers.
"If you have your CFP you do more revenue and grow at a
faster rate," said Dwight Mathis, head of new advisor strategy
at Merrill Lynch Wealth Management.
A study within the private client group of Wells Fargo &
Co's principal brokerage unit found "an incremental
increase" in production among advisers who passed the CFP exam,
a spokesman said.
Those are conclusions that David McWilliams, who holds the
unique title of Head of Wealth Management Transformation at UBS
Wealth Management Americas, would love to reach.
UBS encourages its approximately 7,000 advisers to offer
financial plans to their clients with investable assets of $1
million or more and recently began allowing them to charge as
much as $50,000 for a plan (although most begin with a fee
closer to $4,500). It has an internal "Private Wealth Advisor"
accreditation program for upper-tier advisers and encourages all
to obtain CFP certifications, a spokesman said.
But try as he might, McWilliams, who was a longtime manager
at Merrill Lynch, does not see how the CFP designation leads
advisers to produce more revenue.
"We have no lift in any category on CFPs," he said. "I was
trying to make it work in 100 different ways, but we have
nothing to show."
His conclusions conflict with a CFP Board-sponsored study
from consulting firm Aite Group last year. It found that
brokerage teams that included a CFP holder generated 30 percent
more revenue than teams without one. Solo practitioners with
certification did even better, producing 40 percent to 100
percent more than brokers with no certificates.
The credential, oft recommended to investors by consumer
advocates, works best among new advisers, the study said. Among
advisers who have been practicing 10 years or less, only 8
percent make more than $215,000 a year. The number more than
doubles to 17 percent if they have a CFP designation.
HIGHER STANDARDS, HIGHER COSTS
To be sure, UBS Wealth and other traditional brokerage firms
have structural, supervisory and legal hurdles in handling a
rapid growth of credentialed financial planners, said Sophie
Schmitt, the senior Aite analyst who coordinated the study.
That is because brokers are regulated as sales people who
are required only to ensure products are "suitable" to a
client's objectives and risk appetite. They are allowed to give
financial advice only if it is "incidental" to a sale.
Obtaining a CFP, however, could subject them to the higher
fiduciary standard imposed on investment advisers, Schmitt said.
That requires them to put client interests ahead of their own,
meaning they cannot sell a product more remunerative to them and
their firm than a cheaper alternative.
A top-tier adviser at Morgan Stanley who has a
CFP-registered partner said he personally resists offering
written financial plans because of potential liability for
giving advice that might conflict with a fiduciary standard of
The riddle for UBS and some other firms is how to market
their brokers as trusted advisers without burdening them with
the fiduciary responsibility in every client encounter. The CFP
Board says its ethics code is adaptable to firm structures, but
its disciplinary and ethics committee has brought charges
against advisers who said they had no inkling they were involved
in a fiduciary discussion.
As a result, firms are wary about using the term "financial
planning" even as they move closer to it, Schmitt said.
Some firms have even retrenched. State Farm Mutal Automobile
Insurance Co forced agents with CFPs to relinquish the
designation four years ago because of potential liability for
selling proprietary products, although Maugeri said discussions
with the insurer are continuing on ways to resolve perceived
Firms such as Northwestern Mutual Life Insurance are now
tiptoeing into the planning market by promoting financial
planning credentials only to select advisers.
A senior executive at one of the biggest U.S. broker-dealers
recently told Schmitt that having a CFP designation does not
increase a job applicants chances of getting hired because of
the higher supervisory costs involved in managing such advisers.
The firm was not UBS Wealth Americas, she said.
As for McWilliam's bottom-line quandary, the CFP Board's
Maugeri is dismissive.
"That ship has sailed," he said. "Firms recognize that CFP
certificants are some of the most successful they have."
Merrill's Mathis agrees: "Getting a CFP made me a better
adviser and my production went up every year after I got it."