Traditionalists vs. securities licensed agents: The great divide expands

By Rodney Ballance

The Financial Leadership Academy


We have to stop the growing divide between the one side of our business who thinks everything must revolve around the stock market (particularly mutual funds) and those of us who believe that traditional products still have a relevant place in every person’s financial plan.

Life insurance agents all over America are deeply aware of the growing divide in our industry between securities licensed agents and traditionalists. We’ve watched this segmentation grow over the past three decades — along with the popularity of the 401(k) — as more and more rookies are brought into our business by companies teaching them that the only way to help clients is to get them in the stock market.

Traditionalists, like me, have an understanding of a good overall financial plan. We know what a good plan looks like, how the plans work and the reason for each phase of the plan. We further understand that it is absolutely irresponsible to throw someone into the volatility of mutual funds without first building them a strong foundation using guaranteed products.

I recently received a notice from NAPFA. In this notice written by Ann Marsh, published on December 4, 2012, I learned that effective January 1, 2013, NAPFA is making the CFP designation a prerequisite for membership.

One statement in that article caused me great concern as a professional: “'NAPFA’s National Board recognized that the profession needed to rally around a singular professional designation in the same way the public trusts that professionals with CPA, MD, or JD marks are meeting education, training and ethics requirements, the association said in a statement.'”

As much as I agree with the premise of one base level designation to be recognized in the same way an MD or CPA is, I completely disagree with using CFP. I have numerous reasons for this strong opinion, and I know I’ll draw some heat from some of my dear friends who hold this designation.

Reason No. 1:
There is a minimum requirement of a four-year college degree for CFP. I know some wonderfully talented financial planners who do not have a college degree. These highly skilled professionals did not have the luxury of attending college in their younger years and have had to work their tails off to provide for their families. To exclude these experts is a travesty to our entire profession.
Reason No. 2:

The people who are graduating college now with the CFP designation only have an understanding of how to sell mutual funds. These youngsters, even though quite talented in their trade, have no idea what it’s like to sit down with a family after the death of the primary provider. They have no idea what it’s like to deliver a death claim to someone who throws the check across the room because it isn’t nearly enough to provide for the necessary costs of living.

These talented young men and women are focused on one thing: What mutual fund might provide the best ROI to my client? I’m certain that none of them entered our industry because of a promise of making their own hours and large commission checks, bonuses and expense-paid trips all over the world. I know that none of them would ever consider our business for what’s in it for them, right?

Reason No. 3:

People are confused enough. If someone thinks that simply making the CFP designation the standard will erase that confusion, why don’t you take a look at a man with 30 years in this business, who has worked hard to provide a good living for his family and the best job possible for his clients.

Let’s then say that the thought of having a CFP is the be all and end all in our business. And because someone who just graduated college with the designation but has no real idea of how money truly works is more qualified to provide guidance than this trusted expert with three decades of experience.

Will the public leave the trusted guidance of the true professional and fall for the sales tactics of the other simply because they recognize the designation? If they do, will that less-experienced representative immediately undo everything the professional had put into place? Will the new rep explain that the replacements and “portfolio adjustments” are necessary because the other strategy is completely outdated?

Will this new strategy provide more or less sleepless nights for the client? Will the new rep even care that the client is awake, while they enjoy that trip to Europe? Will the new agent ever realize that the safety and security of time-tested and proven financial products such as permanent life insurance and fixed-rate annuities make them a perfect fit for foundational purposes? Will it be too late for the client when the rep figures this out?
Friends, I am passionate about this. If there is to be one accepted designation in our industry, it must provide basic and advanced strategies for professionals who want a real understanding of personal finance.

It must be taught by real professionals who know what they’re talking about, and not just some academics spouting off theory and concept. People who provide competent and factual instruction to the classes they teach.

We have to stand up and be heard on this issue. We have to stop the growing divide between the one side of our business who thinks everything must revolve around the stock market (particularly mutual funds) and those of us who believe that traditional products still have a relevant place in every person’s financial plan.

I’ve been securities licensed. In fact, I was a registered principle and decided to give them up so I could speak freely with my clients without compliance issues and teach people how various financial tools work. My philosophy is simple. I believe that when people make their money work hard for them, they don’t have to work so hard for their money.”

Maybe those of us who have been members of NAPFA need to drop our membership in protest of this ridiculous idea and become members of an organization that truly focuses on all of us. When one organization puts their entire muscle behind promoting the industry as a whole, instead of their own agenda, everyone benefits, especially the buying public.