Harold Evensky, long a leading voice in the movement to make the financial advice business a profession, is joining the board of governance for the Retirement Management Analyst (RMA) designation. Evensky’s embrace of the RMA designation represents another big win for the fledgling new financial advisor licensing body. But why would a past chairman of the CFP Board embrace a rival designation? Why would a staunch advocate for the CFP embrace a designation that was a shortcut to the CFP? Why create a competitor? Evensky answered these questions in a phone interview earlier today.
“The CFP mark, as far as I’m concerned, is the Rolls Royce of credentials in financial planning,” says Evensky. “The RMA is not in the same league.”
However, Evensky says the RMA designation should be embraced by CFPs and other financial advice professionals because it is in the best interest of consumers.
While Evensky concedes the rise of the RMA could add to designation proliferation, which already is confusing to consumers, Evensky says educating the hundreds of thousands of advisors the RMA program would be good for the public.
“We need to stop focusing on whether the RMA is good for CFPs and think about representing the public,” says Evensky, “And, in that light, the RMA has significant value.”
That Evensky is supporting the RMA designation is consistent with his record. In 1999, when he was chair of the CFP Board, Evensky proposed creating a “CFP Lite” designation. Much like the RMA, the failed CFP Lite effort would have made it easier for an advisor to attain a professional designation without nearly as much work as earning a CFP license. Then, as now, Evensky argued that a designation that’s easier to get than a CFP would be good for consumers.
“If 100,000 advisors at wirehouses got the RMA designation, would the public be better off?” Evensky asks. “I think so. It is not a mail-it-in designation and requires a fair amount of work.”
As with CFP Lite, an effort that was derided by many CFPs at that time, Evensky says the public would benefit if advisors with no accreditation would earn an RMA because they would then be committed to abiding a professional code of ethics and getting professional education.
“The RMA is not at all about selling insurance,” says Evensky. “Yes, there are insurance salespeople interested in it. But I would not be involved in with the RMA if I did not believe it was driven primarily by a focus on professionalism.”
The RMA designation is backed by a not-for-profit group, the Retirement Industry Retirement Income Industry Association (RIIA). Launched in 2009, the RMA hopes to transform the financial advice profession over the next decade as millions of retirees struggle to create secure income streams, and the group is positioning itself to become as influential an professional body akin to the CFP Board.
RIIA’s core value proposition is that it the insurance, investment, financial planning and other branches of the financial advice field are currently functioning like silos. Francois Gadenne, founder of the not-for-profit group RIIA behind the RMA, says his group’s mission is come up with retirement income solutions that incorporate the bodies of knowledge across the different silos in the financial services industry.
Evensky says CFPs should not be threatened by the RMA because the CFP designation is "infinitely more substantive." "CFPs should be more worried about growing competition from CFAs and CPAs, which are both moving aggressively into the financial planning field," says Evensky, "and that is where the competition will come from."
The group scored a success a few months ago, when Wade Pfau, who has researched and written extensively on retirement financial issues, became director of the curriculum for RMAs. RIIA thought leaders regularly contribute articles to A4A. Pfau happens to be the speaker at this week's A4A webinar.