CERTIFIED FINANCIAL PLANNERS (CFP®) use their education and experience to assist clients in developing a broad-based financial strategy to help them reach their goals. See this new commercial from the CFP® Board for a quick intro in how a CFP® can help you. For more information on why you need a financial plan and what a CFP has to offer, please visit the Let’s Make a Plan website.
“It was the best of times, it was the worst of times…” Charles Dickens, A Tale of Two Cities March 9th, 2009 was a monumental day at Modus Advisors. That was the day we opened our doors as a new company in Eden Prairie. The last two years have flown by. It was an exciting time with great opportunity, and I’m thankful to all of our wonderful clients who have shared these two years with us. March 9th, 2009 also signified the bottom of the stock market, ending the downturn that started in October 2007. The stock market, as measured by the S&P 500, had declined 57% from its peak, the largest percentage drop in the market since the Great Depression! Fear was everywhere, and it seemed like the world as we knew it was coming to an end. It is easy to look back now, with perfect hindsight, and see the great opportunity the stock market presented in March of 2009. Unfortunately, the opportunity wasn’t very clear back then, and the outcome was by no means certain. The dangers and risk were easy to see, but the opportunity wasn’t.
In the post- Bernie Madoff era, investors need to be more diligent than ever in making sure the investment professionals they work with are reputable and legitimate. Unfortunately, there has been a dizzying array of credentials that have been recently created in an attempt to convey a level of expertise in a given area. Professional designations arose decades ago as a way for firms and individuals to identify qualified practitioners. The CPA is the most recognized designation in the accounting field, and other industries have their most recognized designations as well. In a recent article by Jason Zweig and Mary Pilon in the Wall Street Journal, the authors claim that there are over 200 designations implying a level of expertise for financial advisers! While some of these designations are true measures of achievement, others have fairly low standards and often serve to build up a salesman’s perceived credentials much more than his knowledge base. So which of these designations are legitimate, and which aren’t worth the price of the paper they’re printed on? One way to differentiate between the different designations is to inquire about how difficult the designation is to obtain. For example, a multi-year designation requiring hundreds of hours of study should result in more expertise than a weekend course with an online test. Zweig and Pilon believe that the Certified Financial Planner (CFP®) and the Chartered Financial Analyst (CFA®) are two of the most difficult designations to obtain. CFPs must take the equivalent of 15 credit hours of undergraduate level courses. This equates to 15 hours of class-time per week for a full semester of college. The CFP designation is achieved by passing 10 hours of exams spread over two days. The CFA® requires roughly 900 hours of study in accounting, economics, ethics, finance and mathematics, and students must pass three six-hour exams. Less than 50% of candidates pass each level of the three-part exam. Imagine studying 300 hours for a test and not passing the exam! At Modus Advisors, Matt Wright holds the CFA® designation and Tad Weiss the CFP® designation. This shows our commitment to the financial planning and investment profession, and ultimately to our clients. There are many other meaningful designations in addition to the CFA® and CFP® and a designation in and of itself does not guarantee expertise or ethical behavior. A good starting point in finding the right financial advisor is to determine their commitment to their profession, and one way this is shown is through achieving a meaningful professional designation. Tad M. Weiss, MBA, CFP®