In the New Economy, fewer salespeople will call
WEST LAFAYETTE, Ind. Is the world of the much-ballyhooed New Economy so changed that your insurance man or stock broker won't try to sell you policies or stocks anymore?
Not quite, but two professors in Purdue University's counseling and financial planning major say the financial industry is changing from a basis in selling to a comprehensive advising approach.
"It's not just about dollars and cents anymore," says Sharon A. DeVaney, associate professor of consumer sciences and retailing. "Today, people don't want to be sold financial products such as life insurance, mutual funds or accounting services. Clients want the tools and the options to make their own decisions."
Increasingly, individuals and families view those decisions in the context of their whole lives, financial and otherwise, according to Flora L. Williams, professor of consumer sciences and retailing. "It's not one-size-fits-all anymore because financial matters are so complex, involved and interrelated," she says. "It's about the clients' hearts as well as their minds, their dreams and their fears.
"Computers have greatly advanced calculating the time value of money, so financial planners are free to address the unique needs of individual clients," she says.
There are a number of factors that have contributed to the rise in the financial planner's profile. The nation's unprecedented economic expansion has meant more people have more money, more stocks, more mutual funds and consequently a great deal more involved financial lives that demand more expertise. DeVaney speaks of clients' desire for "integration" of questions and concerns about investments, insurance, flexible spending accounts, taxation, credit, financing college for children, long-term health care for parents, retirement planning, Social Security, etc.
The Jobs Rated Almanac 2001 ranks the Certified Financial Planner as the nation's top job. The almanac by Les Krantz and published by St. Martin's Press ranks jobs based on work environment, income, employment outlook, physical demands, security and stress. Financial planners have a good work environment, high pay, comparatively low stress and workplace autonomy, according to the book.
Nationally, there are 35,893 licensed planners (as of July 31), according to the Denver-based Certified Financial Planner Board of Standards. Typically, planners' services cost $2,000 to $5,000 per year, according to DeVaney.
That may sound a bit steep for a middle-income family already trying to keep so many financial balls in the air, but the new financial planning profession is adapting. "There are new firms over the horizon that offer fee-based advice for specific financial questions," DeVaney says. "These firms are confident that repeat business from clients will grow into sales of complete financial planning packages."
There are two routes to becoming a certified financial planner, according to DeVaney and Williams. Both end at the Certified Financial Planner exam.
"Unlike the Certified Public Accountant exam, which is knowledge based, the Certified Financial Planners' exam is practice based and demands three years of experience," DeVaney says. "It is a very challenging problem-solving test."
The Certified Financial Planning Board has registered 158 educational programs across the country that offer curriculum in more than 100 topics necessary for the practice of financial planning. Traditional students graduate with a bachelor of science degree from university programs, such as Purdue's major in financial counseling and planning, which is housed in the School of Consumer and Family Sciences. A number of smaller business schools also offer the degree.
There are also intensive programs, generally used by older career changers, according to DeVaney and Williams. It is becoming more common for traditional industries, such as banks and insurance companies, to encourage their employees to broaden their skill sets to include counseling for the clients to which they formerly sold individual products.
"Consumers want to maximize their resources and their overall quality of life," Williams says. "The challenge for the new breed of planners is to combine technical tools with communication skills and working with people."
Sources: Sharon A. DeVaney, (765) 494-8300, firstname.lastname@example.org
Flora L. Williams, (765) 494-8297, email@example.com
Writer: J. Michael Lillich, (765) 494-2077, firstname.lastname@example.org
Purdue News Service: (765) 494-2096; email@example.com