Certified Financial Shammer

Allow me to set the WayBack Machine to 2005, when I had left Kodak and was also preparing to leave New York.  I had it in my mind at the time to become a financial planner.  The idea appealed to me, helping ordinary people have more control over their financial lives and better prepare for their goals.  I started online coursework, became a student member of NAPFA (association of fee-only financial planners) and attended a one-week conference in Tampa, Florida, that offered “basic training” for new planners.

The conference was enlightening.  It was a turning point for me, as it led me to decide that I didn’t want to do this after all.  First, I learned that much of my workweek would involve “compliance” issues, that is, making sure one is following all the various regulations as well as maintaining a solid paper trail in the event of an audit.  Second, I was told that it takes five years for most independent planners to build a clientele and make any money.  Third, it became evident to me that the prime customers for financial planning services are not “ordinary people” needing help with their money problems, but high-net-worth people (i.e., the one-percenters) who hire and fire planners based on their ability to deliver that  extra one percent of return on their investments.  That was not the game I wanted to play. So I stopped the coursework and decided I would be satisfied managing our own finances.

All this is prelude.  Stepping out of the WayBack Machine and into my home office, you now find me rearranging shelves and cabinets, sorting through files and shredding paper, trying to make space for my wife’s new craft table.  One item I just came across is a copy of a trade magazine for financial planners (called Financial Planning, imaginatively enough) that I had picked up at the conference but never opened.  Flipping the pages, I spotted this article: “You’re the Expert: Promoting your technical skills will show prospective high-​net-​worth clients that you know what you’re talking about.”  The author is Roccy DeFrancesco, JD, CWPP™, CAPP™, CMP™.  Mr. DeFrancesco bills himself as creator of the CWPP™ (Certified Wealth Preservation Planner) designation, along with the CAPP™ and CMP™ designations.  We will get into what all the initials mean in a minute.

DeFrancesco begins by setting the stage for his advice to advisers.  [Remember, he is not writing this for general readership — he is addressing his colleagues.]

While it’s one thing to know about … advanced topics [such as 412(i) defined benefit plans or captive insurance companies], it’s another to sell yourself as an expert in them.  Certainly you have to know your subject in great detail.  But it’s just as important to be perceived as an expert by current and potential clients, as well as by other advisers.

His first piece of advice: “Add alphabets to your name.”  The author elaborates…

… there are many relatively short courses you can take to earn a CFP, CLU, CWPP, CIMC or other designation.  While it won’t be fun finding time for classes, once you finish them you’ll have those letters after your name for as long as you practice.  That means that on every letterhead, return envelope, and business card … you can show clients and other advisers the magic letters.

… I know a few advisers with alphabets after their names who are not very bright; nor would I trust them to help me with my clients.  Nonetheless, you will gain the appearance of being an expert — and you can leverage the appearance to sell bigger and more advanced cases.

So, DeFrancesco doesn’t rely on the “magic letters” himself, but he does understand the potent effect they have on others.  Case in point: witness the thirteen magic letters he adds to his own name.

His next recommendation is to “become an author.”  My idea of an author is someone who creates a thoughtful written work.  But I would be wrong, according to DeFrancesco:

… [A] book doesn’t have to be a 330-page dissertation.  It can be as short as 30 concise pages and still impress your clients.  The key is being able to say you’re a published author.

If you don’t have the time or talent to write a book of your own, you can purchase a ghost book, which has been written or pre-drafted by someone else.  Presumably, you would know the subject matter that such books typically cover…

Most financial advisers buy ghost books simply for credibility… I can’t count how many times a month I tell clients, “I cover that topic in my book.”

I strongly recommend that financial advisers who purchase these books make sure they know and agree with the information provided in them.  To give out a book that has your name on it without knowing the material in it is disingenuous… Moreover, if you were ever found out, it would harm rather than enhance your reputation with clients, certainly not the intended effect.

Here, I would add that giving out a book that has your name on it without having actually written it — there must be a better word than “disingenuous” for that.  I haven’t been able to decide between “slick” and “slippery.”  My thesaurus suggests “untrustworthy.”

Lastly, DeFrancesco points out how writing articles and giving seminars builds credibility.  “I … routinely give seminars for organizations that may not generate business leads but will add luster to my CV,” he writes.  Or, should I say, I think he writes, since it is his name that appears on the article.  (Can one buy ghost-written articles too?  The answer is yes.)

DeFrancesco wraps up with this pièce de résistance of unintended irony:

It’s both difficult and time-consuming to acquire the trappings of expertise, but I can tell you from experience it’s worth it.  There is nothing more satisfying than having clients or their CPA or attorney look at you with that additional bit of trust.*

To be clear, it is not my intent here to disparage financial planners or make you distrustful of them.  In fact, I think most people would benefit from a one-time financial evaluation by a fee-only (i.e., non-commission) professional.**  But how do you select an adviser?  After reading DeFrancesco’s article, I came up with some advice of my own:

• Count the number of letters following the adviser’s name.  If there are more than three (for example, CFP or Certified Financial Planner), then keep looking.

• Call the adviser and ask for a preliminary, free consultation.  If the adviser does not offer a free consultation, then go elsewhere.  If you do meet, make sure it takes place at his or her office, not at your home.  Look at the books on his desk and the books in his bookcase and count how many of them the adviser has written.  If the answer is one or more, you say “How impressive!” and go to the next adviser on your list.

• Also, if you see a model of his boat on his desk, it is time for you to bail out.

• If you get a postcard in the mail inviting you to a free financial-planning seminar and buffet dinner, use the back of the postcard to make out a grocery list for some nice home-cooked meal.  Then toss the card away.  Do not use it to pick your teeth.

• Smooth talkers hope to make money slide smoothly out of your wallet.  An adviser who tries to dazzle you with his own success is perhaps not so interested in yours.

• If you can’t afford a financial planner, you could always start with Suze Orman.

Mr. Peabody’s WayBack Machine (illustrated above) has all sorts of dials, levers, spinners and flashing lights that make the device look very complicated.  But they really don’t do anything at all.  The animator just put them there to make Mr. Peabody look like a genius.  That’s the kind of thing you do when you’re making a cartoon.  Not a financial plan.


* A recent article in the online version of Financial Planner notes that “… a startling 55% [of investors] said they feared that they were getting ripped off by their financial advisors.”  Not enough magic letters, maybe?

** Some advisers will not work with clients on a fee-only basis — avoid them.  They make money by buying and selling securities, often pushing their firm’s own proprietary funds. Others call themselves fee-only planners but charge annual fees based on a percentage of “assets under management.”  I disagree with that practice as well.  In my opinion, it is in your best interest to pay either by the hour or a set price for a specific package of services.  It is too bad that financial advice is not very affordable unless you are low-income (and have access to a non-profit financial counseling agency) or are pretty well-off already.

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