A Thoughtful Designation Strategy Is a Differentiator for Firms
Amid shifts in consumer demand and the evolving financial services landscape, providing comprehensive financial planning advice is now table stakes for firms. Firms have employed various strategies to respond to these shifts, from adopting new technologies and increasing advisor training to making service and structural changes.
But the real differentiator for firms has become the qualifications of their advisor workforce. The firms that stand out are those that require advisors to obtain professional certifications and designations that demonstrate their ability to meet the demands for comprehensive financial planning.
If firms want to gain a competitive advantage, they need to move from a loose (or nonexistent) credentialing policy to a more thoughtful designation strategy. Such a strategy not only guides advisor training, but also shapes client expectations and experience, making it a valuable tool for business growth.
The benefits of a carefully developed designation strategy can be felt across an organization. Advisors may find themselves better prepared and better positioned to provide the comprehensive financial planning advice that is in such high demand. Obtaining rigorous credentials, such as the CFP® certification, supports advisors’ long-term professional success. The additional training and experience required of CFP® professionals makes these advisors more valuable to current clients and more attractive to future ones. Further, some designations and certifications involve an added layer of accountability through various compliance and enforcement programs. This builds the credibility of credential-holding advisors — another quality that can help attract and retain clients.
Having a clear designation strategy in place may also help with recruitment and retention. Aspiring advisors may find firms with designation strategies more appealing because they outline training expectations and the business-building advantage the advisor may gain by obtaining firm-approved designations. Depending on the type of support advisors receive from firms to pursue professional credentials, the designation strategy could also help motivate more diverse candidates to apply. Firms that remove or alleviate the financial cost of pursuing a designation, for example, expand the opportunity beyond those who can readily afford to make that investment themselves.
For existing employees, a designation strategy underscores a firm’s belief in their value and investment in their professional development. When aligned with a firm’s advisory career paths, the designation strategy also helps those advisors early in their career understand the requirements and other expectations they must meet to reach the next step on their career ladder.
Clients may never see a firm’s designation strategy — or even know that it exists — but they will feel its impact in their interactions with your team. Advisors who obtain financial planning-related credentials are equipped to provide their clients with comprehensive financial planning advice. And if those credentials include a fiduciary duty, as CFP® certification does, clients will know they can trust that their advisor is working in their best interest.
For a designation strategy to be effective — meaning that it allows firms to maximize these client and advisor benefits — the strategy must be aligned with a firm’s values, policy, goals and business plan. That is the only way to ensure sufficient advisor buy-in to deliver the higher value proposition of the financial planning service model.
CFP Board offers multiple resources to support firms in this endeavor, including our recently published Strategic Conversations paper, “Designation Policy to Designation Strategy: A Roadmap for Firms.” The paper outlines the critical steps of developing a strategy to help you simplify and streamline the process, in addition to discussing designation strategy benefits in greater detail.
Our outstanding Corporate Relations team also stands ready to assist with strategy development, particularly if you are considering the incorporation of CFP® certification. They can partner with you to help you understand the certification process and requirements, share information on the value of the credential and continue to develop the skills of your advisors who are already certified.
Firms shifting from a designation policy to a designation strategy would do well to remember that the organization, its advisors and clients benefit from a strategy that emphasizes quality over quantity. Allowing or encouraging advisors to pursue a grab bag of credentials simply to add more letters behind their name does nothing to increase your firm’s value or that of the services you provide. An intentional, well-considered designation strategy is an opportunity to convey your commitment to providing competent and ethical financial planning and to set your advisors apart from the competition.
This article was originally published on LinkedIn on July 19, 2022.
About the Author: Kevin Keller, CAE is Chief Executive Officer of CFP Board. CFP Board’s mission is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.