What's in a Licence? Higher standards of fiduciary care for the investor.

In a recent review of various local financial institution web-sites, it was discovered that most of them are now advertising some form of financial planning within their investment advisory services.

While investment planning is only one component of an integrated financial plan, this is extremely good news for local residents interested in saving for the future. It is also a very positive step, in effect, that raises the bar of client due diligence and care because of the fact that financial planning as a profession holds all participants to higher standards!

In Bermuda today (and some other closely aligned countries), anyone can call themselves a financial planner, regardless of their work experience and credentials, because the generic term 'financial planner' is not legislated.

It has always been difficult to understand that the industry that has the most access to a client's largest assets (next to their personal residence) is so lightly regulated. This statement is by no means reflective of the local environment, since investor complaints, arbitration hearings and investment lawsuits have escalated steadily in the past seven years across the board in the US and elsewhere.

Countries, such as Malaysia and Australia, for instance, have learned from the mistakes of the west. No individuals there are allowed to even use the term "financial planner" unless he/she is a CFP|0xae| certificant. Additionally, investment licences are linked to having the financial planning licence. Australia also legislates various types of financial transactions by mandating that when an individual sells their home, for instance, that they first demonstrate they have received objective financial advice from a licensed financial planner.

In 1985 in the United States, seeking to elevate the overall standards of the finance industry, various concerned investment and insurance professionals created the non-profit CFP Board of Standards, a self-regulatory licensing body, to educate and inform the public as well as license, monitor, regulate the practices and behaviour of, as well as protect the trademark CFP|0x99| of those who aspired to earn the right to use the Certified Financial Planner|0x99| certificant licence and trademark.

There is no question that the platinum standard in the planning profession today is the Certified Financial Planner|0x99| practitioner. There are approximately 20-25 CFP practitioners in Bermuda (licensed by the US and Canada). Anecdotal evidence does suggest that the interest by investment personnel in obtaining accredited licensing as financial planning professional is increasing.

As the investing and finance world becomes more complex, those that can interpret complex financial strategies for the benefit of their clients are the advisors that will gain the most in credibility. The financial planning profession is growing exponentially; it is estimated that there are more than 80,000 CFP|0x99| certificants on a world-wide basis.

The CFP certification marks demonstrate standards of excellence in financial planning and tell you that the financial professional that holds them has met rigorous initial and ongoing certification standards for the unsupervised practice of financial planning.

E for standards of Excellence.>The process to become a CFP professional is called the "Four Es" by the profession, and depending upon where the professional would ultimately want to sit the licensing exam, the standards to qualify for the mark are as as follows:

The first "E" stands for "Education" CFP practitioners must complete a set of financial planning courses that cover more than 100 distinct topics. The coursework is available at more than 200 educational institutions in the US and CanadB>

The second "E" stands for "Examination". CFP practitioners must pass a comprehensive two-day, 10-hour certification exam that tests an individual's ability to understand and apply personal financial planning concepts. In Canada, it is not as intense lasting only one day, six hours long.

The third "E" stands for "Experience". An individual must have at least three years of experience in the financial planning process under the tutelage of a licensed CFP practitioner and must also have a university degree. Regrettably, the US grandfather clause that allowed planners without a university degree to take the exam is now over. All US candidates must supply transcripts from an accredited college or university prior to admission to the CFP candidate programmes.

The Canadian FPSC Board, at the present time, does not require a university degree in order to enroll in the CPF process and sit for the ex

The fourth "E" stands for "Ethics".<$> CFP practitioners have their backgrounds checked by CFP Board and must disclose any investigations or legal proceedings related to their professional or business conduct. CFP practitioners also agree to adhere to a rigorous Code of Ethics and Professional Responsibility and Financial Planning Practice Standards.

Once one successfully passes the national standardised exam, CFP practitioners are also held to specific continuing education guidelines in order to maintain their licenses:

[bul] Adherence to practice standards.

[bul] Must renew certification every two years

[bul] Must supply continuing education (30 hours every two years).

[bul] Must provide full disclosure of any ethical/criminal findings.

Why would anyone want to put themselves through such a process? Because by your efforts, you will become the trusted advisor of choice with recognised mark of excellence to serve your clients.

For those thinking about becoming one of the most trusted career professionals in the marketplace today, consider taking up this challenge. Why not work to join a prestigious organisation whose primary focus is in providing independent objective financial advice to clients? Ask yourself, where will you be in four years if you don't? Additional information can be found at www.cfp.net

Next — what does a CFP need to know and what does a CFP licence look like?

Martha Harris Myron CPA CFP|0xae| is dual citizen, Bermudian and U.S. She is a Sr. Wealth Manager at Argus Financial Limited. She specializes in wealth management and objective comprehensive financial solutions for private clients planning for retirement and lifestyle transitions. DirectLine: 294 5709 Confidential email can be directed to marthamyron@northrock.bm

The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell any investment product. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.