When considering a career as a private wealth advisor, you have a choice of designatons and degrees. This story looks at getting an MBA versus a CFA.

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For a short story, it's good but anyone considering these options owes it to himself to explore the full range of designations in the private wealth advice field.

A4A recently hosted a webinar in which all of the major designations were discussed.

Tags: competitors | online financial advice

Yet another online investment advice app has launched, this one from the financial news and data giant, Bloomberg LP.

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“You’re more in control now that you’re monitoring your accounts all in one place and managing your investments to meet your goals,” says the Bloomberg Black website. You know when your asset allocation drifts or requires attention, and you’re talking to your team of investment professionals — whenever you need to.”

This app seems squarely aimed at do-it-yourself investors and is not trying to compete with advisors—not yet at least. Give Bloomberg a couple of years tackle that.

• Possession of client funds or securities (but not of checks drawn by clients and made payable to third parties) unless the recipient receives them inadvertently and returns them within three business days of receipt;
• Any arrangement (including a general power of attorney) under which an adviser is permitted to withdraw client funds or securities maintained with a custodian upon its instruction to the custodian; and
• Any capacity (such as general partner of a limited partnership, managing member of a limited liability company or a comparable position for another type of pooled investment vehicle, or trustee of a trust) that gives a registered investment adviser legal ownership of or access to client funds or securities. [6]

1. Physical contact with cash, checks or similar property;
2. Power to exercise physical contact or control;
3. Power to transfer to oneself or a third party or to negotiate for value;
4. Disbursement of funds or property
5. Signing or endorsing checks or negotiable instruments; and
6. Supervisory or decision making responsibility.

• Acting in the capacity of plan “administrator” and having ultimate responsibility for the plan within the meaning of the definition of “administrator”
• Exercising close supervision over corporate trustees or other parties charged with dealing with plan funds or other property; exercise such close control over investment policy that they, in effect, determine all specific investments;
• Conducting, in effect, a continuing daily audit of the persons who “handle” funds;
• Regularly reviewing and having veto power over the actions of a disbursing officer whose duties are essentially ministerial.

On the other hand, the following would not constitute “handling” of ERISA funds:

• Conducting a periodic or sporadic audit of the persons who “handle” funds;
• Having duties with respect to investment policy are essentially advisory;
• Making a broad general allocation of funds or general authorization of disbursements intended to permit expenditures by a disbursing officer who has final responsibility for determining the propriety of any specific expenditure and making the actual disbursement;
• Having the day to day functions of administering the plan as a bank or corporate trustee;
•  Not performing specific functions with respect to the operations of the plan.

1. An individual and his or her spouse shall not be deemed to be employees with respect to a trade or business, whether incorporated or unincorporated, which is wholly owned by the individual or by the individual and his or her spouse. . .

Tags: competitors | online financial advice

CNBC in a post today reports on Betterment, calling it "one of several relatively new online services offering investors automated financial advice and money management, often at a discount to traditional financial planners." CNBC also mentions and links to Wealthfront, Personal Capital, FutureAdvisor, Hedgeable and Covestor.

The story conclusively shows that mass media outlets have discovered the new generation of online financial advice apps that replace advisors, and it marks the opening of a new chapter in the evolution of the American consumer in personal financial management as well as in how the consumer press covers personal financial advice.

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The relationship between online advice apps and the consumer press is mutually beneficial and will only become cozier in the years ahead. Advisors should understand this relationship because it will impact your ability to succeed.

When major media like CNBC report on online advice apps that replace advisors, it's a great story. The press is empowering consumers to save money—unfortunately, by firing advisors.

The consumer press is in business to make money, of course. If a reporter can write a story telling readers how to cut advice fees by using a DIY app, it makes great copy. And, without doubt, advisors not focusing on serving high-net-worth (HNW) or ultra-HNW clients are going to get less business because of increased competition from automated advice apps serving the mass affluent.

Reporters and editors at major media outlets can produce stories rating which apps are best and make these apps vie for coverage. The media are heroes for educating consumers, saving them money, and putting them in control of their financial lives.

Point is, you’ve got these two institutional forces—the press and the financial intelligentsia—united in a mutually beneficial goal that work against advisors to the mass affluent.

Over the next three years, some chunk of the mass affluent market—individuals with a net worth of up to $1 million —will be lured to use an app instead of an advisor. Advisors serving the mass affluent are seeing a shakeout slowly unfold.

Keep in mind, most of the coverage of online advice apps is produced by young reporters and editors who have little or no experience with money. Because it’s a good story, the media are predisposed to accepting that advice from an automated app is as good as going to a real live financial planner without much skepticism. They may spend little or no time pointing out meaningful differences in the quality of advice generated by one automated advice engine versus another. And they seem unlikely to mention when an advisor is a better choice than automated advice. That’s why you get puff pieces like this story on CNBC today.

Advisors must fall on the side of good sense. Individuals who need nothing more than investment management might indeed want to hire one of these online apps. But consumers who need advice a couple of times a year or more often on a financial issue other than investing—inheritance, college saving, retirement income planning, and insurance, just to name a few topics—probably want an advisor.

Advisors may want to post comments to stories like the one on CNBC. Help consumers understand who an automated investment advice app is right work for and who it can work against. Moreover, advisors want to be sure their business plan depends less on investors that can be helped by one of these online advice apps.