Passing the Series 79 test is required for applicants of entry-level jobs as investment banking representatives. In addition to the Securities Industry Essentials (SIE) exam, this test is a necessary step to obtaining registration for the job. Both tests are administered by the Financial Industry Regulatory Authority (FINRA).
The Series 79 is considered a lighter version of the Series 7 exam, but don't be fooled because it's deceptively difficult. Keep memorizing to learn more about the Series 79 exam, including prerequisites, what you'll need to pass, and the breakdown of the test.
Key Takeaways
- Financial professionals who want to work in investment banking are required by the Financial Industry Regulatory Authority to pass the Series 79 exam.
- Candidates must be sponsored by a FINRA member to take the exam.
- The test is a multiple-choice test with 75 questions covering subjects like debt and equity offerings, mergers and acquisitions, and financial restructuring.
- The test takes 150 minutes and is taken on a computer.
- A passing grade is 73% and above.
The Basics of The Series 79 Exam
Focus on Investment Banking
The Series 7 was required of all financial professionals, including those who wanted to become investment bankers prior to 2009. Investment banking is only a small portion of the Series 7 exam, most of which is more relevant to the functions and services of retail securities firms. An investment banking committee agreed on the major duties, job functions, and tasks associated with those working in the field after conducting a job analysis. This allowed for changes to be made.
The Securities and Exchange Commission (SEC) approved the new Series 79 exam in 2009. This test, which is also known as the Investment Banking Representative Qualification Examination, is commonly referred to as the Limited Representative Investment Bankers exam because it was designed for entry-level investment bankers.
There are specific areas of finance for which one will likely need the Series 79 license. FINRA Rule 1220(b)(5) defines the different types of representative categories, and section (i) Limited Representative-Investment Banking gives a thorough explanation of the areas.
Series 79 test Prerequisites
The Series 79 test satisfies the Series 24 prerequisite as a representative exam. Since the test focuses on investment banking, the Series 24 General Securities Principal is limited to investment banking supervisory responsibilities if the candidate only has passed the Series 79 exam.
Testers generally need the Series 79 registration even if they already have the Series 7. This is one of the only cases where the Series 79 can be used as a prerequisite instead of the Series 7. Candidates may need the Series 79 to work in a number of key areas, including debt, equity, or mergers and acquisitions (M&A).
Debt or Equity Offerings
Companies have several options available to them when they need to raise money. Along with borrowing money from a financial institution, they may issue a debt or equity offering:
- A debt offering normally comes in the form of a coupon or corporate bond, in which the issuer promises to pay the bondholder or investor their principal investment along with interest by a certain date.
- An equity offering, on the other hand, involves the issuance of new shares of corporate stock. Doing so gives investors an ownership stake in the company.
Debt or equity activities that may require a series 79 include:
- Pricing of securities in debt and equity offerings
- Origination, which deals with equity capital markets and debt capital markets
- Underwriting
- Marketing
- Structuring
- Syndication
- Managing the allocation and stabilization activities of offerings
Mergers and Acquisitions (M&A) and Restructuring
Advisory services are a very important part of an investment banker's role, especially when it mergers and acquisitions. M&A refers to the consolidation of companies or assets. This can take place through a number of financial transactions. Some responsibilities that a Series 79 might be required for under this category can include:
- Tender offers
- Selling assets
- Corporate reorganization or divestitures
- Transactions involving business combinations, which might include rendering solvency and fairness opinions
Series 79 Exceptions
Series 79 registration may not be required for professionals who have limited involvement in investment banking activities. There is some leeway, though, in some jobs in which new associates rotate among various business areas and departments for training purposes. These financial professionals are generally given a six-month grace period while they are training. For a complete guide to exemptions, look at FINRA Rule 1230.
The genuine Exam
A tutorial on the test is provided prior to taking it. The test is made up of 75 multiple choice questions and is completed on a personal computer. Each candidate’s test includes 10 additional questions that do not contribute to the candidate's score.
Candidates are given 150 minutes to complete the exam. The results are available immediately after the test as a pass or fail grade, with a breakdown of the candidate's performance in each section. Individuals need to answer 73% of the questions correctly for a passing score.
Candidates must be sponsored by a FINRA member to take the exam. Requirements for eligibility include taking the appropriate qualification examination. Individuals are required to pass both the Series 79 and SIE exams in order for test-takers to become registered.
You don't need to be take the Series 79 and the SIE exams at the same time.
Test Sections
There are three sections to the test. The 10 additional questions are scattered throughout at random and are not identified as such.
Collection, Analysis, and Evaluation of Data
This is the largest section, taking up 49% of the test with 37 questions. It includes identifying the relevant data and knowing where to find it. For example, you may need to know what will be in proxy statements Form 14A or Form 4s for beneficial ownership of directors.
This section also goes into communicating with various departments and clients, using metrics and ratios, and analyzing trends to evaluate what you have found in the firm and sector data.
Candidates are also tested on their understanding of due diligence activities in this section, such as the regulatory requirement for the buy and sell sides.
Underwriting/New Financing, Offerings, and Securities Registration
This section has 20 questions, making up 27% of the test.
It deals with regulations for filing and registering securities. This includes forms, such as the prospectus, as well as rules, and required financial statements.
This section also covers the distribution of marketing materials and any associated rules.
M&A, Tender Offers, and Financial Restructuring
With a total of 18 questions, this section is roughly 24% of the exam.
Some of the issues covered in this part of the test relate to buy-side and sell-side transactions, the fairness opinion, and SEC rules and regulations. It also tests a candidate's knowledge of tender offer regulations and financial restructuring.
All About the Investment Banking Series 79 test FAQs
Is the Series 79 Easier Than the Series 7?
The Series 79 and Series 7 are two different exams required by financial professionals who wish to obtain registration by FINRA. While the Series 7 is required by all securities representatives at the entry-level, the Series 79 test is a requirement for anyone who wants to work as an entry-level investment banker. The Series 79 test is 75 questions and takes 2.5 hours while the Series 7 is made up of 125 questions and takes three hours 45 minutes to complete.
How Hard Is the Series 79 To Pass?
The Series 79 test is more difficult than the Securities Industry Essentials exam. The SIE test is commonly considered an introductory test while the Series 79 involves concepts that may be more complex required by those who need a higher degree of skills in the investment banking industry.
How Do You Prepare For the Series 79 Exam?
There are a number of Series 79 prep courses you can take in order to prepare yourself for the exam. These courses provide you with study materials and practice tests that you can take. Many of them come at a cost, ranging between $200 to $300.
Who Needs to Take the Series 79 Exam?
Financial professionals who wish to work as entry-level investment bankers are required to take (and pass) the Series 79 exam. Candidates must also pass the Securities Industry Essentials test in order to obtain registration, although it isn't required that the exams are taken together.
The Bottom Line
Anyone who wishes to perform certain duties in the financial industry must become a registered representative with the Financial Industry Regulatory Authority. In order to become registered, individuals must pass certain exams. The type of test depends on the type of position they seek. Professionals who want to become entry-level investment bankers must pass the Series 79 exam, along with another test—the Securities Industry Essentials exam. The Series 79 tests an individual's knowledge and skills in a number of areas, including debt and equity offerings, along with tender offers, mergers and acquisitions, new financing, and financial restructuring.
Registered adviser, fiduciary, independent adviser, investment adviser representative, RIA, licensed, designated, unbiased, what does it all mean? As an investor seeking an adviser, it can certainly be confounding.
Various types of licenses, designations, financial industry jargon and affiliation options are a lot for anyone to digest. Twenty-two years of helping people understand it all has led me to a profoundly simple list of questions to help you decide if an adviser is right for you. Here it is:
- Do you know them? (Where they introduced through a trusted friend, family member or other adviser?)
- Do you like them?
- Are they patient with you?
- Is s/he a CFP® professional?
- Does s/he have at least 10 years of experience?
Five yeses to these questions will likely lead to a long-term successful relationship. It can be that simple.
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For those seeking deeper knowledge and insight, good news! I’ve broken it down here. Here are five additional aspects to consider as part of working with a financial adviser.
1. Registered Rep, IAR or both
A representative who is registered with the Financial Industry Regulatory Authority (FINRA) brokers investments and is associated with a broker-dealer (a firm). Investments implemented by a broker are generally commissionable products, such as an A share or C share mutual fund, variable annuity, 1031 exchange product, non-traded real estate investment trusts, variable life insurance, oil and gas partnerships and real estate limited partnerships. The advice they supply must meet the suitability standard, meaning the investment must be suitable for the investor, but not necessarily the best (or least costly) choice for them.
An Investment Adviser Representative (IAR) generally works for a flat fee for planning and advice or for a percentage of assets under management. There is no commission involved, and the IAR works as fiduciary, meaning the adviser has an ethical duty to recommend the best investments for you.
An IAR can be associated both with Registered Investment Adviser and maintain a license with a FINRA registered broker-dealer. Or, with a stand-alone RIA that does not have a FINRA registration and therefore the adviser does not have a FINRA license (see explanation 2 below).
2. Series 6 & Series 7
Now that we know to ask if an adviser is FINRA licensed and whether s/he is an IAR for a broker-dealer’s RIA or stand-alone, it’s time to evaluate an adviser’s FINRA license, if applicable. This is public information and can found by entering his/her name on the Broker Check site: https://brokercheck.finra.org/ (opens in new tab). Two common licenses obtained to implement investment solutions are the Series 6 and Series 7. If an adviser has his/her Series 6 then they can deal with variable investments (investments tied to the stock markets) but are limited to mutual funds and sub accounts inside variable insurance products.
A Series 7 licensed professional registered with a broker-dealer will be able to offer a substantially wider scope of investments, including individual stocks & bonds, exchange-traded funds, private placements, non-traded REITs, and stock options. The suitability standard applies to those operating under the Series 6 and Series 7 license.
3. Series 65
What licensure is required by investment advisers (IARs)? Unlike the Series 7 and the Series 6, an individual does not need to be “sponsored” by a broker-dealer to take the required exam. The Series 65 test was designed by the North American Securities Administrators Association (NASAA) (opens in new tab) and administered by the Financial Industry Regulatory Authority (FINRA). The Series 65 is an test and license required by anyone intending to provide financial or investment advice on a non-commission basis. Those advisers passing the Series 65 test operate under the fiduciary standard.
4. Certified Financial Planner
Let’s talk financial planning. Where does a CERTIFIED FINANCIAL PLANNER™ professional fit in with all this licensure info? In the realm of comprehensive advice and working across disciplines, the CERTIFIED FINANCIAL PLANNER™ designation is commonly held in the highest regard amongst industry professionals. Becoming a CFP® certificant is one of the most stringent processes and one of the hardest designations to obtain in terms of the financial advice industry. It requires years of experience, successful completion of standardized exams, a demonstration of ethics, a formal education and ongoing continuing education. A CFP® professional active in the practice of charging clients for advice will at least have his/her Series 65 and operates as a fiduciary.
5. Compliance Considerations
There have been steps taken to curb bias and unsuitable recommendations from FINRA registered representatives. One sweeping legislation was Reg BI, which can be read about on FINRA’s website (opens in new tab). These stringent regulations have influenced many advisers to drop their Series 7 and work only as an IAR through an independent RIA.
It is arguable that there is less oversight of RIAs by the SEC or the states, and therefore there are fewer compliance eyes on the recommendations and solutions being offered. While IARs still want to bring advanced solutions to their clients that have traditionally been vetted by a significant due diligence team at a FINRA registered broker dealer, smaller RIAs may not have the financial capacity or legal experience to vet investment offerings as thoroughly. Be certain to inquire about the legal and due diligence process involved in vetting any specific investment, especially those that aren’t open to everyone in the investing community.
Hiring an adviser with the intention that he/she and their team eventually earn the role of your trusted adviser is an important one. Whether you take the profoundly simple list of questions to ask yourself and the potential suitor or take a much deeper approach, having some knowledge will be helpful and should add value in assisting with your decision.
Jeremy DiTullio is a registered representative of Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Cleveland Financial Group® is a marketing name for registered representatives of Lincoln Financial Advisors Corp. CRN-4636401-032322
Last Spring, I had a chat with a journalist from one of our competitors who had been/is taking adviser qualifications.
I found her efforts admirable and this conversation really gave me food for thought.
In the next few months, I mulled over the idea of preparing for a professional certification myself and shopped around, because there are plenty of professional bodies and exams out there.
I wanted something that would interest me but also be useful at the same time. Therefore, it would have to be a certification in investment.
I first considered the CFA Level 1 as it was the investment qualification I had heard the most about.
However, the fees ($900 to $1,200) and the low pass rate (37%) had the effect of a repellent on me. I thought it was not reasonable to spend that much money for something that would in all likelihood end up being a complete disaster.
You may call me pessimistic, I will answer that I am just not self-delusional. If even financial professionals find it hard, my chances were close to none and the technical level is probably way above what a financial journalist needs.
I had a look at the other programmes listed on the CFA’s website and came across the Investment Management Certificate (IMC).
After further research, I had made my decision. This was the right certification for me in many regards.
It aims to provide the foundations in investment management and acquiring the baseline knowledge. It is all I need for now.
Also, while the CFA is not related at all to financial advice (from what I know), the IMC does look into this profession, albeit superficially (it is primarily aimed at investment managers rather than financial advisers). As a result, it still had some relevance to my job.
Last but not least, the IMC is relatively UK-focused in comparison to the CFA which is global in its nature. As I am not a complete stranger to the UK financial industry, that would play in my favour.
I have not completely abandoned the idea of sitting the CFA Level 1 one day. Life is still long (hopefully) and the IMC will enable me to test the water. If I cannot complete it, then the CFA Level 1 is completely out of reach.
As soon as I moved house to a more comfortable and quiet place, there was no excuse and I had to walk the talk.
At the time of writing, I have just passed the first unit ‘The Investment Environment’.
I will not deny it, it is a great relief, but I am only halfway there. I will need to successfully pass unit 2 ‘The Investment Practice’ to complete the certification.
In short, it is half time, I am leading 1-0, but there are 45 further minutes to play.
What was on the menu?
For those who are not familiar with the IMC, the first unit is structured in six chapters: 1- Financial markets and institutions, 2- Ethics and investment professionalism, 3- The regulation of financial markets and institutions, 4- Legal concepts, 5- Client advice, 6- Taxation in the UK.
‘The regulation of financial markets and institutions’ is arguably the most important chapter and is also by a far and wide the longest one. Of the 85 questions at the exam, between 25 to 35 will be allocated to this chapter.
Luckily, it was no terra incognita for me as it extensively deals with the role, status and powers of a very familiar organisation: The Financial Conduct Authority.
While working at Money Marketing certainly facilitated the study of this chapter, I still had to digest extensive extracts from the FCA Handbook.
The chapter also covers, albeit in a much more concise manner, the rest of the UK regulatory bodies.
Some were totally unknown to me such as the Panel of Takeovers and Mergers and the Competition and Markets Authority.
Others sounded familiar, but I did not know what their role was prior to my study. That would include the Prudential Regulation Authority (PRA) or The Financial Policy Committee.
The difficulty of this chapter was definitely its length and the importance of the information it contains. Almost every single line is crucial and there is no other way than learning by heart.
Some questions in the test simply test the knowledge of the regulatory principles but others require one to apply those same principles in case studies.
It means learning everything verbatim is not enough, you also have to understand what you are learning.
The second and fourth chapters also involve learning the material by heart, but they are thankfully much more succinct.
The first chapter was probably the most destabilising one to me. It smoothly starts with an introduction explaining how the financial system works, who the different actors are and how money circulates between them.
It then abruptly delves into a world that was completely unknown to me: investment exchanges and their infrastructures.
It required a lot of back and forth between Investopedia and the study book to understand what things such as central counterparties, market makers, clearing houses, SETS, SETSqx, bid-ask spread were.
Chapter 5 was the sunshine after the rain. It purely focuses on investment, which was the reason why I chose to study for the IMC in the first place.
It gives a description of the different categories (and sub-categories) of clients and asset classes.
There is also a limited (but interesting) financial advice piece. It includes among others fact find, establishing investment objectives and how to allocate a portfolio based on those objectives.
The chapter also looks into the asset allocation in different types of pension funds, general insurance and life insurance.
I really enjoyed the strategical dimension in this chapter. It was, at least to me, more stimulating than regulations and it also means that I did not need to review this chapter very often.
But against my initial expectations, chapter 6 is the one I preferred.
As it deals with UK taxation, I feared it would be incommensurably dull, but there was also this strategical dimension that made this chapter as stimulating as the previous one.
Obviously, you have first to learn all the UK taxes that are relevant in an investment context, but once it is done, that is when it becomes interesting.
First of all, you have to learn all the computations to calculate those taxes but also strategies to mitigate them.
Maybe tax planning was my true calling, who knows?
How I prepared
I had a lot of apprehension while preparing for this exam. Of course, I have sat exams in an academic context before, but professional exams were something new to me. I did not know what to expect.
Also, I had to deal with a time constraint. The study material is renewed every 1 December and I started in late August, which means I had to successfully pass the test for this unit 1 before 30 November. I was not too eager to start all over again almost from scratch and I am not sure my bank account would have liked me to pay the fee for a second attempt.
As a result, I followed the recommendations provided by CFA UK (the body organising the IMC) very scrupulously.
It advises at least 100 hours of study for unit 1. Since I am not a finance professional, I knew I would need more.
Therefore, I aimed for 100 hours just for what I called the “initial phase”, which was about memorizing the study book five times and writing down things I had trouble memorising. It’s time consuming, but I find it makes it easier to process information.
It is very tempting to read passively, it happens instinctively. But writing (especially in your own words) forces you to actively engage with the content.
After an initial skim read of the study book, I had a rough of idea of the length and complexity of each subchapter.
I then allocated those 100 hours for this “initial phase” between late August to 28 October. The point was to ensure I would have two weeks left before the test to focus on my weaknesses.
On 28 October, the result was below the requirement threshold. While the recommendation is that you should score at least 75% at the mock exams, I only got 71% at the mock test I took immediately after completing this so-called initial phase.
But it was a good opportunity to identify my areas of weakness and the two final weeks were dedicated to remediate to those shortcomings.
I read over and over all the subchapters I had not well assimilated and practised the mock exams again and again until I scored above 90%. In total, I have spent around 150 hours to prepare for this exam.
That was sufficient this time around.
Afterthoughts
It was an interesting experience and I feel relieved my efforts bore fruit. I am not getting complacent though. I know I have only completed the easiest unit of a relatively “beginner-friendly” certification.
I have learnt plenty of things, some of which will, I hope, be useful in my work.
It also answered some questions I had been asking myself for a while. For example, I did not know much about the UK regulatory bodies beyond the FCA.
I guess I also now have a vague idea of what advising clients on investment requires and how to structure their portfolio (I am not saying I would know how to do it, I just roughly know how those things work).
The most immediate benefit I gained from this unit is a solid overview of the UK tax system. With the upcoming Autumn Statement, I hope to be able to make good use of what I have just learnt.
However, I do wonder what I will remember of it in say six month’s time. This is especially true of the contents that had no relevance or link to what I do in my everyday (all the things related to investment exchanges for example).
But I suppose, even pros do not retain everything they have learnt while studying for their certifications.
As I have not had any free evenings over the past few months, I will supply myself a break until December. Although I must say, it already feels strange not having to study after work. It just does not feel normal.
I look forward to start learning for unit 2. From the few I could see, it will be much more mathematical than unit 1. I hope time has not eroded my numeracy skills too much (I used to be an accountant a while ago).
Hopefully, this Weekend Essay will have a part II in a couple of months.
How long is the program?
The Master of Financial Analysis degree is a 33 credit program that can be taken on a full or part-time basis. This is a lock step program for full-timers, meaning students will take the same set of academic classes. Students will take five courses in the Fall and five courses in the Spring.
Part-time students have up to 4 years to complete the program and must take the same set of classes in their first and second semester. After that, they are free to take the remaining classes at their own pace, within the maximum time frame. Part-time students are accepted in both the Fall and Spring semesters. Students must complete an Accounting for Managers course before the first semester.
What is the SIBE program?
The CFA exams are only given in English. In addition, English is the language of business. Our program is designed to not only prepare students academically, but the program also provides a way for students to Strengthen their English proficiency. By taking our Summer Intensive Business English (SIBE) program, successful students should perform better in their finance classes as well as on the CFA exams. Our SIBE program focuses on strengthening English speaking, writing, listening, and memorizing skills, while expanding practical skills such as professional networking, public speaking and giving presentations, analyzing business publications, conducting meetings, interviews, and negotiations, writing persuasively, and other critical proficiencies. All international students required to take the TOEFL will be required to attend our 6 week (25 hours per week) SIBE program. Students will be placed in SIBE classes based on their level of English proficiency from lower intermediate to advanced. International students, exempted from taking the TOEFL (see Admissions) will still benefit from taking the summer intensive English coursework and are strongly urged to do so.
For more information about our SIBE program, please click here.
Is the MFinA Program just a training program to become a financial analyst?
No. The MFinA program, like all accredited degree programs at Rutgers Business School, provides you with an education not training. The courses are rigorous and teach students to assess and solve problems. The CFA designation certifies to employers that you have the ability to add value to your firm. Many different types of firms value applicants who are proceeding toward the CFA designation. As a result the following list of what jobs CFAs do (source CFA Institute) reflects the value of our degree and the designation to a diverse set of company types:
- 22% Portfolio Manager
- 16% Research Analyst
- 7% Chief Executive
- 6% Consultant
- 5% Corporate Financial Analyst
- 5% Financial Advisor
- 5% Relationship Managers, Sales, & Marketing
- 5% Risk Manager
- 4% Investment Banking Analyst
- 3% Manager of Managers
- 3% Accountant/Auditor
- 3% Strategist
- 3% Trader
- 1% Broker
- 1% Performance Measurement Specialist
- 1% Private Banker
When does the program start?
For international applicants who have not studied at an American university for 2 or more years or have not taken an American financial accounting class in the last 3 years, classes start at the beginning of July.
For international applicants who have studied at an American university for 2 or more years and have taken an American financial accounting class in the last 3 years, you will attend the International Student Orientation at the end of August.
For US citizens or permanent residents, classes begin on the first day of the fall term.
Our 20 month Part Time program only starts in the fall. Our flex part time program starts in either the fall or spring.
Note that US government visa rules require international students studying in the US to attend full time. Therefore our part time programs are only available to US citizens and permanent residents.
Can I attend part-time?
Yes. A part-time option is available and geared toward working professionals with at least two years of work experience. Our 20 month Part Time program only starts in the fall. Our flex part time program starts in either the fall or spring.
Note that US government visa rules require international students studying in the US to attend full time. Therefore our part time programs are only available to US citizens and permanent residents.
On what campus is the program offered?
The Rutgers MFinA full-time program is taught at Rutgers Business School's $85 million building on the Livingston campus, one of five campuses that make up Rutgers University-New Brunswick, a secure, suburban campus in rural New Jersey. Students interested in the part-time program have the option of taking courses on the Livingston campus, on the Newark campus and any satellite campus locations.
What financial aid or assistance is available?
Students in this program are eligible for financial aid and assistance that are currently available to all graduate students (i.e. state and federal loans and grants). We offer a small number of $5,000 merit based scholarships to deserving enrollees. We do not offer teaching assistantships or graduate assistantships at this time.
How is this degree perceived by business, companies, etc.?
The Master of Financial Analysis degree is designed to cover over 70% of the material covered on the Chartered Financial Analyst (CFA) Level I exam. As stated on the CFA Institute website:
"The CFA Program is a globally recognized, graduate level curriculum that provides a strong foundation of real-world investment analysis and portfolio management skills along with the practical knowledge you need in today’s investment industry. It also emphasizes the highest ethical and professional standards."
For more information on the CFA designation, visit the CFA Institute website.
Is on-campus housing available?
Yes. There are graduate student dorms on both the Livingston and Busch campuses. To find out more information about campus housing including rates click here. Information on dining services can be found by clicking here. A good overview on life at Rutgers as a graduate student can be found by clicking here.
Although the CFA test includes questions on ethics, the curriculum does not include an ethics course. How can I prepare for that portion of the exam?
We will run a non-credit short course on ethics during the program. The course will be held on a Friday so that your other classes are not impacted. To prepare for the ethics portion of the test you should attend the 7 hour non-credit ethics class.
What is the timing of the Master of Financial Analysis program relative to the CFA exams?
Level I of the CFA exams is given in December and June. It is anticipated that graduates of the MFinA program will take the Level I test in June following graduation.
I have heard that I should take a review course before I take the CFA Level I exam. How can I do that?
Once your coursework is finished in May, we have arranged for the Chartered Financial Analyst Society of New York (CFASNY) to hold a four day boot camp on our New Brunswick campus. This "boot camp" will bring together all of the subjects you have learned in your coursework. The CFASNY is a member institution of the CFAI. They have been offering review classes for over 25 years. All review classes are taught by CFA charter holders. For more information click here.
Does the program accept transfer credit or advanced standing?
If, in the 3 years prior to the beginning of the fall term, you have completed a financial accounting class at an Association for the Advancement of Collegiate Schools of Business accredited university, that class will replace the Accounting for Managers class taught in the program. Students will receive advanced standing and are waived from being required to enroll in the class. This will decrease the required credits from 33 to 30. All other courses must be taken at Rutgers Business School.
What about careers?
The Career Management office provides career-related counseling, resources, and programs to help current MFINA students and alumni to clarify career goals, establish career plans, and develop job-search skills. We build relationships with alumni, employers, and other career offices to optimize career opportunities while also creating strategic partnerships with our stakeholders.
In addition, the career management office established a partnership with an immigration law firm to provide our employers with set fees and resources for obtaining work visas and employment-based permanent residence options. RBS established a partnership with The Chinese Finance Association, which provides mentoring and professional networking opportunities for current MFINA students.
The strongest job growth for CFAs is in the Asia- Pacific region. While only 15% of CFA charter holders are from the Asia-Pacific Region, nearly 45% of those registered to take the CFA exams were from the same region indicating strong interest in obtaining the CFA designation in Asia and the Pacific Rim.1 Matthew Richards, CFA, in a 2006 article in the Financial Times2, points out that while in the US 25% of the employees in jobs for which the CFA is a credential are CFAs - that number is only 2% in China and India. This indicates very strong prospects for CFAs in those countries.
We expect many of our students to obtain jobs in the Asia/Pacific Rim area. Resources that can help you achieve jobs in that region are available at CFA Career Services, including Job Line - a CFA exclusive job board service to apply for top investment jobs throughout the world. Students are urged to join the CFA Institute as candidates and obtain the "CFA Career Guide For Asian Pacific Region."
1 Source CFA Institute
2 "Crouching tiger hidden dragon - CHARTERED FINANCIAL ANALYST: India and China are likely to leap to prominence in the world of staff trained in finance", by Matthew Richards CFA, Financial Times, June 19, 2006, page 6.
What about Employment Outcomes?
MFINA graduates from the Class of 2019 reported a 53% employment rate* within 6 months of graduation. Note: based on 95% response rate.
MFINA graduates from the Class of 2018 reported a 70% employment rate within 6 months of graduation. Note: based on 95% response rate.
*Placement rate defined as the percentage of graduates who either return to home country to work or obtain employment in US within 6 months of graduation.
What about practical training following completion of my degree?
The United States Citizenship and Immigration Services (USCIS) allows graduate students with F-1 visa status, and who have been pursuing a degree for more than nine months, to work to obtain practical training in their field.
Optional Practical Training (OPT) is temporary employment directly related to an F1 student’s major area of study and is commensurate with the level of education being sought. An F1 student may be authorized 12 months of OPT for study at one education level and may become eligible for another 12 months of OPT after changing to a higher educational level. An F1 student with a degree majoring in science, technology, engineering, or mathematics (STEM) may apply for extension of an additional 24-month OPT while in a valid period of post-completion OPT. Students in English language training programs are ineligible for practical training.
Is the MFINA program a STEM program?
Yes. The United States Citizenship and Immigration Services (USCIS) allows graduate students with F-1 visa status, and who have been pursuing a degree for more than nine months, to work to obtain practical training (OPT) in their field. The USCIS allows graduates of certain programs to have an additional 24 months of OPT beyond the normal 12 months. These programs are called “STEM” programs and our program qualifies as a STEM degree. As a result of the MFINA STEM designation, students that graduate from the Rutgers Master of Financial Analysis program are eligible to work with a student visa for up to 36 months following graduation.
I am a new student starting my studies in the fall/summer session at Rutgers University. Can I begin my studies in the fall/summer if I cannot come to the U.S. in time?
As a new student, you would need to come into the U.S. and report to Rutgers to activate your SEVIS record and legal status. If you are enrolled for the summer/fall, and unable to come to the U.S., your F-1/J-1 record would need to be deferred to the start of the next semester. You may be able to begin your program from overseas if your department/school provides remote instruction options, but your immigration status would only be activated when you are able to enter the U.S.
More information about delayed enrollment, as well as possibly beginning Rutgers enrollment and courses while abroad (using online or other methods), will be outlined in future communications.
University Policy for Students on COVID Vaccinations
Is there a minimum number of credit hours I need to be admitted to the program?
No. You are only required to have an undergraduate degree in accounting.
Is a GMAT always required?
Students who complete their undergraduate degree in accounting from schools other than Rutgers and The College of New Jersey (TCNJ) are required to submit a GMAT score with their application.
If you complete and/or are completing your undergraduate degree in accounting from Rutgers or The College of New Jersey (TCNJ), you are not required to submit a GMAT score as long as your cumulative GPA at the time of submitting your application is at least a 3.0. If you are a Rutgers student and your GPA falls below a 3.0, you must submit a GMAT score as part of the application process.
The GMAT is waived for applicants who have successfully completed all four parts of the CPA test and can provide a letter from the licensing jurisdiction indicating completion of all four parts of the exam.
If you have successfully completed other professional licensing requirements (e.g., The Law Bar exam, Chartered Financial Analysts, Certified Management Accountant, etc.) you may petition the program director for a waiver of the GMAT requirement.
What is the minimum GMAT score considered appropriate for admission into the MACC-FA program?
The average GMAT score is 550.
Are letters of recommendation required for RBS or The College of New Jersey (TCNJ) accounting graduates?
No. RBS and The College of New Jersey (TCNJ) accounting students with GPAs in excess of 3.0 are not required to submit two letters of recommendation with their application.
Can an applicant who did not receive an undergraduate degree in accounting be admitted into the Master of Accountancy in Financial Accounting program?
Yes, but an applicant with an undergraduate degree in something other than accounting must have completed the 24 credit hours of accounting courses required to be considered an accounting major.
The prerequisite accounting courses are as follows:
- Introduction to Financial Accounting
- Introduction to Managerial Accounting
- Intermediate Accounting I
- Intermediate Accounting II
- Advanced Accounting
- Auditing
- Income Tax Accounting
- Cost Accounting
- Accounting Information Systems
All prerequisite courses have to be completed prior to admission into the financial accounting program.
Are international students eligible to be admitted into the MACC-FA program?
Yes. There are two options for taking the program:
- F-1 holders of an undergraduate accounting degree from a U.S. institution can take summer core courses plus fall completion of three in-class electives and two online electives.
- F-1 holders of an undergraduate accounting degree from a U.S. institution can take summer core courses plus fall completion of three in-class electives and one online elective and spring internship depending on availability. If you choose this option, you must discuss at the beginning of your first semester to ensure internship is available.
Is an applicant required to have a B in calculus and statistics at the undergraduate level for admission into the Master of Accountancy in Financial Accounting program?
No. Calculus and statistics are not required to be admitted into the financial accounting program.
What documents are required to be submitted to the Graduate Admissions Office by Rutgers Business School and The College of New Jersey (TCNJ) accounting undergraduates who have a cumulative GPA of 3.0 applying to the financial accounting program?
The following documents must be submitted to the Graduate Admissions Office by Rutgers Business School and The College of New Jersey (TCNJ) for accounting undergraduates:
- RBS online graduate application
- Resume
- Essay (on an ethical dilemma)
- Official Transcripts from all institutions attended
- Application Fee
Does the financial accounting program accommodate applicants who work full time, given that the summer core courses are full time?
Yes. However, the five core courses are only offered during the summer semester on campus. The accommodation is to allow students to split the courses over two summers. We would, however, expect the employer to confirm their support for the student's participation in the program.
Are there other required courses in addition to the five core courses taught in the summer?
No. However, if admitted into the financial accounting program, we highly recommend you take both the Governmental Accounting & Auditing and Ethics in Business courses unless you took an equivalent course in your undergraduate studies.
How are the elective courses outside of the five core courses taken by students?
Elective courses are typically taken online, but also may be taken in a formal classroom setting. Formal classroom courses must be approved by the program director and can be taken either on the Newark or New Brunswick campuses.
International students (F-1 holders) are required to take three courses in the classroom.
What other online courses can be used as an elective for students in the financial accounting program?
Online courses offered in the Master of Accountancy in Governmental Accounting program may also be taken. Examples of such courses are:
- Design and Development of Information Systems
- Government Budgeting Systems
- Public Sector Auditing
- Public Financial Management
How many hours does a student have to take in the Rutgers Business School to be considered a full-time student?
A full-time student in the Rutgers Business School is defined as a student who takes a minimum of 12 credit hours.
Are there scholarships or financial aid available to students admitted into the MACC-FA program?
There are no scholarships available to students admitted into the financial accounting program. There is, however, a financial aid program set up by the Financial Aid Office. For more information, please contact:
Last names A-D: Vanessa Galindo
Last names E-L: Martha Arevalo
Last names M-R: Urvi Khandhar
Last names S: Nicholas Ramjattan
Last names T-Z: Maria Correia
Are there TA (teacher's assistant) positions available for students enrolled into the financial accounting program?
Due to the nature of the program, there are no TA positions available in the program.
If my employer provides full tuition, do I have to pay the term bill upon receipt or can I pay when I receive the voucher from my employer?
There are two ways that employers fund the education of their employee's education—direct billing or tuition reimbursement.
Direct Billing – The student is issued a voucher from the employer with the indicated tuition benefit the employer is providing for the semester. The student submits the voucher to the Rutgers Billing Office. The Billing Office will then prepare an invoice and submit it to the employer for payment. The employer does not have any stipulations for payment (e.g., grades).
Tuition Reimbursement – The student pays the term bill by the due date for the semester. At the end of the semester, after grades are submitted, the student submits a tuition reimbursement request to his/her employer. The employer reimburses the student for the indicated tuition benefit, provided the student meets the stipulation in the employer's tuition reimbursement program (e.g., attainment of a certain grade level).
In the event that the employer provides the student with a tuition reimbursement option, the student must pay tuition up front (by the billing due date for the semester) and manage the reimbursement process separately with his/her employer.
Can an RBS undergraduate student take the graduate elective online courses prior to completing his/her undergraduate degree in accounting?
Yes. An undergraduate student interested in applying for the financial accounting program may request special permission to take a graduate elective. Restrictions apply.
If I am admitted to the financial accounting program, am I required to complete the degree requirements within one year after beginning the program?
No. While most students complete the requirements of the financial accounting degree within a year after beginning the program, the program is flexible and permits students who may have work conflicts to arrange their classes around those conflicts. A student who fails to register for any courses for three consecutive semesters must formally notify the senior program administrator and registrar of their plans for program completion.
Can I take online courses on a non-matriculating basis?
No. You can not take online courses on a non-matriculating basis. These courses are limited in size and to students who have been formally admitted to program.
Is there summer housing available to students admitted into the program?
Yes, summer housing is available for students admitted into the financial accounting program. Information on summer housing may be obtained by sending a request for information to oncampus@rci.rutgers.edu.
How do I register for summer classes?
New students are registered for the summer core classes by the program administrator during orientation.
Where are the summer core classes taught?
The summer core classes are taught on the New Brunswick (100 Rock) campus.
University Policy for Students on COVID Vaccinations
Selecting the right financial advisor is a major factor in retirement success. A good relationship between you and your advisor begins with a diligent vetting process.
This process includes gathering the data needed to select an educated and competent candidate who shares similar values regarding money.
You can prepare to interview potential candidates by formulating a list of essential questions. Before putting your nest egg into anyone’s hands, you should be satisfied with the responses to these questions.
Do you operate according to fiduciary standards?
A fiduciary is legally and ethically bound to act in good faith, putting clients’ best interests ahead of their own. When an advisor acts in a fiduciary capacity, you have an extra measure of assurance that they are there to help you succeed and not just sell you a product or service.
How do you describe your safe money philosophy?
Before you ask an advisor candidate this question, it’s a good idea to know what your feelings are about money. Are you OK with investing a little more aggressively, or prefer a conservative approach? Is a long-term “buy and hold” part of your money mindset? Do you want socially responsible companies when you invest? When you discover your money mindset, you can determine if your advisor candidate’s investment philosophy aligns with yours.
Can you describe how working with you would be?
It would help if you got an idea of how accessible the financial professional is, how often they will be contacting you and their preferred communication tools. Are they well-equipped to work virtually, or do they prefer in-person meetings? Asking this question allows the advisor to describe their process, including how clients are onboarded and their accounts serviced.
How do you get paid?
Knowing how your advisor gets paid is vital, as awkward as it may feel to ask this question. Fee structures come in many various configurations. Specific compensation methods can drive advisors to recommend particular products not because they are right for their clients but because they offer higher commissions.
What education and professional designations do you have?
Designations in the financial services world are plentiful and somewhat less than transparent. There is a tendency to associate letters after someone’s name with competence and honesty. Don’t emphasize an advisor candidate’s alphabet unless they can explain what those letters mean and what course of study was followed to obtain the credentials. Anyone working with your money must demonstrate a level of advanced training, specific product knowledge and commitment to continuing education.
How do you achieve proper portfolio allocation?
Portfolio allocation is both an art and a science. Correctly diversified asset distribution is essential if you are still in the accumulation phase or early into retirement. How an advisor works to achieve such balance gives you insights into their attitudes toward risk and growth.
Can you explain what I will find when I Google you?
Any worthwhile financial advisor realizes the value of a positive digital reputation. Asking about online reputations tells a prospective advisor that you will be checking their background and allows them to clarify any issues.
What’s your backup plan?
Do you know who would help you if the advisor was unavailable for some time due to illness or injury? You want to know if there is a plan in place if your primary advisor isn’t available. Having a backup plan is especially critical if you’re hiring an advisor on assets under management (AUM) basis.
Having the right advisors on your team is one of the most critical factors in creating a safer, sounder retirement. Be diligent and thorough in your research if you want a happy, long-term relationship with your financial professional and satisfactory growth for your wealth. These are just a few questions to help you begin your advisor vetting process.
Lyle Boss, a native Utahn, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.
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Just 8 per cent of UK adults have taken financial advice over the past year and the regulator thinks this isn’t enough. The Financial Conduct Authority wants to make financial advice more accessible, by introducing a new type of “core advice” for people with about £10,000 to invest.
In theory, this is a great idea, reducing the minimum level of assets required to access advice from around £50,000 now. Who could be against widening access to professional financial advice from the 3.1mn people in the UK who had an ongoing relationship with a financial adviser at the end of 2020, to perhaps 4.2mn more who might benefit?
Sarah Pritchard, executive director of markets at the FCA, says: “These proposals are part of our work to deliver a consumer investment market where people can readily access support and firms aren’t deterred from providing it.”
But the devil will be in the detail. Many retail investors wealthy enough to want an adviser face difficulties finding a suitable firm, working out the costs, and assessing whether it’s worth the money.
Benjamyn Damazer is 70, and considers himself “financially reasonably knowledgeable and aware”. He says: “Prior to reaching 65 I shopped around for a financial adviser to help me determine what best to do with the multiple pension pots I had accumulated, some assets I had and some liabilities including an interest-only mortgage and some credit card debt.
“The search was painful. Trying to ascertain what it was, specifically, that each firm offered, why they were different from, or better than, anyone else I found impossible. Comparing charges was a nightmare.”
He decided to try an adviser that he saw quoted in the Financial Times. “I left the meeting with some seemingly sensible ideas about what to do, and perhaps more importantly, what not to do. I have stuck with them ever since,” he says. “Do I get good advice? Do I pay fairly or competitively? Would I be better switching to another firm? I literally have no idea. And worse, I have no idea how to find out.”
Damazer is one of a number of FT readers who responded to our callout asking for comments about people’s experiences with financial advisers. We wanted to hear what readers thought at a time when market turmoil has prompted many clients to question their advisers. We found plenty of criticisms — but also praise from those who felt they benefited, especially from the personalised advice good advisers can offer.
Smaller providers fall away
Potential clients can choose between independent financial advisers (IFAs), giving unbiased advice about the whole range of financial products; and restricted advisers offering advice on a limited range of products. They may specialise in one area, for example pensions, or they may advise on products offered by a limited number of companies.
There are more than 36,000 retail investment advisers, a number which has grown steadily over the past seven years, according to the FCA. But these advisers are working in a shrinking number of firms with the larger financial advice firms getting bigger. FCA data show firms with more than 50 advisers accounted for 49 per cent of all adviser posts in 2021, compared with 45 per cent in 2018.
The regulator hopes advisory firms will relish the chance to expand services to the less well-off. But advisers say there are big hurdles ahead, not least the costs.
Most IFAs offer a free initial consultation, at which they should also provide an outline of costs. But there’s a lack of transparency around charges, with few financial advisers publishing them upfront.
One that does is Bath IFA Candid Financial Advice. For advice on a £400,000 Isa or pension you would pay £2,000 initially, followed by £1,600 for annual advice. Derbyshire’s Red Circle charges £2,250 for a full financial plan, followed by 0.8 per cent annually on the first £250,000.
Julie Flynn, an independent financial adviser with Glasgow-based Bree Wealth, says: “I don’t know if we’re scared to put our fees on because we’ll scare people off. But not having them displayed also scares people off — they don’t approach us because they worry they can’t afford us, or they don’t have enough money to engage with us.”
Simon Harrington, head of public affairs at The Personal Investment Management and Financial Advice Association (PIMFA), the adviser’s trade association, offers an explanation. He says: “Some firms don’t publish fees because it’s not incumbent on them to do so and the evidence is that the average IFA client tends not to be price sensitive. Some firms also take the view that if they were to publish, their competitors would undercut them.”
He hints that things might change in response to the FCA’s new Consumer Duty, coming next July. “Firms might feel it’s incumbent on them to be more upfront about how they charge.”
But wealth managers warn that even if fees become more transparent they will not necessarily fall. Jeremy Webb, a chartered financial planner with Concept Financial Service, based in Cannock, says: “The problem with reducing the cost of advising clients is the ongoing expense involved in running a regulated firm, for example professional indemnity insurance, FCA fees (which are exorbitant) along with the general day-to-day costs of running a business. It’s important for clients to obtain advice at an affordable cost, but while our costs increase it’s hard to see how this will be achievable.”
As a result, the percentage of advisers accepting new clients with less than £50,000 in financial assets has plunged to 32 per cent from 52 per cent in 2019, according to last month’s Schroders Adviser Survey, which polled 439 advisers. And 17 per cent will accept new clients only with more than £200,000.
To complicate comparisons, IFAs charge clients in different ways. Whether it is a percentage of assets, flat fees or hourly rates, there are disparities. And some IFAs offer a choice. Clarity, which has offices in London, Woking and Cambridge, gives clients an extensive fees menu: fixed charges for agreed tasks, an hourly rate for complex work, and/or a monthly or annual retainer.
Some newer charging structures are coming through. For example, Women’s Wealth offers subscription services at £65 and £125 a month — like a gym membership for financial fitness. While innovative, there’s no immediate way of knowing whether this — or indeed other new packages — will offer better value than older models.
The FCA found in 2020 that total annual fees — covering advice and investment charges — are 1.9 per cent for holistic advice, which looks at all aspects of personal and financial life. Last month’s Schroder’s Adviser Survey found 99 per cent of advisers charged an average annual percentage fee below 1 per cent of assets. The discrepancy with the FCA data highlights the measuring difficulties.
The effect of fees
Many FT readers point out the compound effect of percentage charging for decades can be devastating to long-term financial returns. A 2 per cent fee can wipe out 40 per cent of your investment returns over 25 years, according to calculations from Vanguard, the investment house.
However, advisers defend ongoing percentage fees to make sure they have time for you when you suddenly need help. This might come into its own, for example, in financial shocks, such as those which followed the outbreak of Covid-19, Russia’s invasion of Ukraine and the UK’s September “mini” Budget.
In such times, investors often panic — and sell up. A good wealth manager will swiftly call to intervene. At Bree, Flynn says: “Stopping people doing stupid things in moments like that is where the real value is added.”
Vanguard research shows that investors too often sell when they should buy and buy when they should sell. It says advisers can make a critical difference by helping their clients avoid these mistakes.
Also, the FCA’s research found that customers value human interaction and make few complex financial decisions without some human support.
But some FT readers say they don’t necessarily want such help. They say a lot of investment advice is simple and argue that it’s not worth paying 1 per cent of investments for an IFA to recommend, for example, a stocks and shares Isa. We had reader comments to the tune of “just select a Vanguard fund at 0.19 per cent”.
Those who do seek more personalised advice say the most value comes in the initial review, or in complicated matters like pension drawdown. But, frustratingly, readers have found gaps in some key areas, for example on transferring a defined benefit pension or developing a property portfolio.
So, do your homework before committing to the initial meeting, as you may find yourself at the end of a sales pitch for services you don’t need. Colin Low, a chartered financial planner with Kingsfleet Wealth, says: “If you have any concerns that they are putting their interests before yours, they are not the right people to work with.”
A good indication of value are the customer reviews of IFAs on the vouchedfor.co.uk website, where you can search for an IFA. A decent financial adviser should also be able to provide references.
Qualifications are a useful indicator of professionalism. Seek out a chartered or certified financial planner or someone who has a Level 6 diploma from the London Institute of Banking and Finance or Chartered Insurance Institute.
A good way forward is to seek an IFA that wants you to educate yourself and seems pleased if you are knowledgeable. So make sure what they say at the free initial meeting is thoughtful and adds to what you’ve already learnt. Otherwise, what are you paying for?
How to cut the cost of advice
Free “guidance” services won’t supply personalised recommendations but can be worth calling before using an IFA.
MoneyHelper gives money and pensions guidance over the phone, online and face-to-face. Its subsidiary Pension Wise was set up when the pension freedoms were introduced in 2016.
The Pensions Advice Allowance allows you to withdraw up to £500 tax-free from your defined contribution pension for retirement and pensions advice.
The £500 allowance can be used three times to access advice at different life stages. But research from Benefits Guru, an independent adviser, found fewer than half of workplace pension providers facilitate these allowances. Aegon, Legal & General, Scottish Widows and True Potential do.
Companies can also pay for employees’ financial advice as a tax-free benefit, up to £500. Used in combination with the pensions advice allowance, this means up to £1,000 in one tax year.
Is financial advice worth paying for? FT readers have their say
NO
Dr Helen Read says: “I have seen a lot of financial advisers over the years and found them a total waste of time.
“They always push stuff they get commissions on, starting with life insurance which I don’t want, and then managed investment funds which I don’t want. Occasionally they propose taking a percentage of my savings to ‘manage’ those. It seems easy to see that a robo-advice platform is better for my circumstances, and they never advise those. My accountant gives me the best financial/tax advice I need and I have my own common sense.”
Anonymous via email: “The ‘comfortable/mid-net worth’ sector is very poorly served by the financial services industry, and anyone willing to spend some time doing their own management is better off with DIY for everything short of will writing and the creation of trusts.”
Another anonymous reader says they asked about 10 IFAs for a service where the firm would remind them each year to make full use of available Isa and pension allowances and inform them of significant changes in portfolio fund valuations or strategies. “Everyone could and would do one and two. No one was able to do three. They all said that they didn’t have systems in place.”
MAYBE
IPOC (via online comment) says: “I used a financial adviser to calculate how long my pension and investments might last when I did retire. He used a piece of software that added little to what I had already calculated using my own spreadsheets, compound interest calculators and online tools.
“He was unable to suggest how I might combine Isa withdrawal and pension withdrawal in the most tax-efficient way, something that [free pension calculator] Guiide does brilliantly.
“He did offer some good advice on previous year pension contributions and I more than covered the fees as a result.”
YES
Anonymous via email: “What the small firm and individual adviser has is access to a lot of common knowledge in the industry. But they have, above all, a relationship of trust and confidence with their long-term clients. That takes long to build up but can easily be lost. My advice would be to test an IFA and pay the fees cheerfully; test your risk-averse instincts against their advice and assess their advice in terms of its financial success; and keep asking questions.”
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Question: I had financial advisors while I was working, but I haven’t been happy with either of the two big firms I worked with; I understand now that working with financial advisors who have vested interests is not a good idea. So after that, I started managing my own stocks when I was laid off at the end of 2018, and I got an annual return of 36% in 2019 and 72% in 2020.
The past year I left my gains behind, and this year I’m starting to get desperate. I always knew how ignorant I was, but this reality has been brutal. I’ve learned a lot — the main thing being how much I don’t know, despite my efforts to educate myself. I understand that there are financial advisors that do not offer to manage your money, they just educate and advise. Where and how can I get some direction from one of these professionals? (Looking for a financial adviser too? This tool can help match you with an adviser who might meet your needs.)
Answer: You’re absolutely right that there are financial pros that just educate and advise, rather than manage your money for you, and frankly, these are the right types of financial advisers for many people. First, we’ll supply a brief overview of some of the different types of advisers and the ranges of what they charge, and then we’ll talk about how to find the right one.
Have an issue with your financial adviser or looking for a new one? Email picks@marketwatch.com.
Different types of financial advisers and what might make sense
Advisers who work using the assets under management (AUM) model manage your investments for you, and they typically charge about 1% of the assets they manage to do so. On the other hand, an hourly adviser doesn’t manage your investments for you, and instead gives advice for an hourly rate that is typically between $200 and $500. Project-based advisers also don’t manage investments for you and tend to charge $2,500 to $10,000 for a project like building you a financial plan you can follow for years to come. (Looking for a financial adviser too? This tool can help match you with an adviser who might meet your needs.)
Certified financial planner Kaleb Paddock says you’ll likely benefit from an ongoing hourly advice relationship, where the adviser never manages your money but acts as a partner to guide you and help you optimize your decision making. Pros say you also might want someone who has obtained the certified financial planner credentials — which means they’ve completed certain education requirements, have passed an exam, completed thousands of hours of professional service and adhere to high ethical and professional standards.
Where can you find an adviser?
Some of the best places to look for advice-only advisers are the XY Planning Network and the Garrett Planning Network. But, notes says certified financial planner David Barfield of Datapoint Financial Planning, “Even when browsing advisers on XYPN, you need to be selective. Many advisers in that network also use the percent of assets model so you have to look specifically for advisers who do not even offer the option to manage assets.”
Other spots to look include “the Fee Only Network and the National Association of Personal Financial Advisors (NAPFA), but not all of those advisers offer hourly or advice-only services, so you’ll need to confirm on the adviser’s website before reaching out to them,” says Paddock. Here are the 15 questions you should ask any adviser you might want to hire, and how to vet the person as well. (Looking for a financial adviser too? This tool can help match you with an adviser who might meet your needs.)
Have an issue with your financial adviser or looking for a new one? Email picks@marketwatch.com.
Questions edited for brevity and clarity.
As a financial professional who has been practicing for over 20 years, I have become very popular lately at networking events and parties due to the current economic climate. One of the questions that I hear almost every day is: Who should I turn to for help with my financial decisions?
While the answer may seem simple, it is anything but. Some turn to friends and family, however, this advice (while good intentioned) often lacks context. Over the years, I’ve gained an appreciation for how complex and unique each individual’s finances are, so what may have worked for a friend or family member may not be appropriate for everyone. Furthermore, not everyone has a trusted family member or friend to turn to. This is why many folks turn to financial professionals, but unfortunately, the term “financial planner” or “financial advisor” doesn’t have a single meaning across the industry. Consumers are left largely uninformed and confused.
At last count, there are somewhere around 200 financial designations that can be obtained and marketed to financial professionals. Many of these designations are inadequate representations of a person’s genuine skills and experience. Let’s take a look at a few key things employers and investors consider before looking for someone to deliver financial consulting services.
Licenses and certifications
Those seeking a financial professional should be aware of the licenses and/or certifications they possess to better understand their qualifications.
Licenses for financial professionals are typically issued either by state securities boards or by the federal government through the Securities and Exchange Commission (SEC). The licensing requirements vary, but they at least require a review of the professional’s background, employment history, and the completion of an appropriate test to demonstrate proficiency in financial services.
Certifications are typically issued by private entities and have requirements that must be met both before and after certifications. One highly sought certification in financial services is the Certified Financial Planner™ Professional or CFP® certification. CFPs are accredited by the Certified Financial Planner Board of Standards and have met the requirements in areas such as examination, experience, education, and ethics. Other highly coveted certifications include CPA (Certified Public Accountant) and CFA (Chartered Financial Analyst).
Financial professionals should have one or both of the items mentioned above in order for a client to be assured that there is accountability for the recommendations that they make. You can look up a prospective financial planner on FINRA’s BrokerCheck to see if they hold any state-issued securities licenses, as well as a history of where they have registered their licenses and been employed in the past. You’ll also see any past disclosures of complaints registered against the planner.
Fiduciary versus suitability
The term “fiduciary” has become a buzzword for many financial professionals and firms, and has only recently started to gain traction among consumers. It refers to the standard of care that a financial professional is required to exercise when making recommendations to investors or clients. The fiduciary standard of care indicates that the financial professional must put a client’s interests first above all else. So why isn’t every financial professional a fiduciary? The simple answer is that they are not required to be. Instead, they can legally operate under a standard of suitability that requires a recommendation simply be suitable for the investor but not necessarily the best for the investor. You will commonly see this standard being utilized by insurance professionals or investment brokers that are recommending financial products and earning a commission on the sale of those products.
Financial professionals can use the word fiduciary in their marketing when in fact they may be anything but that. To determine whether someone is a true fiduciary, they should be appropriately licensed and credentialed with institutions that support the fiduciary standard.
Advice versus guidance
One of the more commonly misunderstood distinctions between various financial professionals is “advice” versus “guidance”. These are two forms of communicating how an individual can Strengthen their financial decision-making.
Guidance is high-level information or education about broad financial topics. This often comes in the form of financial education or financial counseling or coaching. Unfortunately, concepts of financial guidance can be delivered with little accountability or regulation. Any person or firm can present themselves to the public as a purveyor of financial guidance; however, the guidance is general in nature and may not apply to an individual’s unique circumstances. To put it more plainly, Google searches could be considered financial guidance. For many individuals, this level of information is not enough to help them make financial decisions and, in some cases, can even be harmful if the guidance is implemented incorrectly.
On the other hand, financial advice is very specific and considers an individual’s needs, goals, and financial condition. Advice not only includes education, but also specific actions and activities that should be implemented by the individual to achieve certain financial outcomes. The other benefit is that it is heavily regulated and financial professionals who provide advice are held accountable for their recommendations. Financial professionals that deliver incorrect advice can be subject to fines and public censure by regulatory agencies. Regulated professionals must also document their advice, as well as how it meets the fiduciary or suitability standards if audited.
For example, while financial guidance can explain what a 401(k) is, financial advice is required to understand whether a client should contribute, how much, and what investment options would be best for them.
Understanding the differences between advice and guidance will help investors determine what type of financial professional they need.
Whether someone is seeking financial help as an individual or selecting a financial wellness solution for employees, we recommend considering each of these three points as part of the selection process: look for a financial professional that is licensed, credentialed, and who operates as a fiduciary.
Money decisions are important and should be guided by professionals that can help people reach their financial goals in an efficient and ethical way. Considering an employee benefits budget is one of, if not the largest, expenditure for an employer, it’s key to follow a thoughtful process and ensure corporate responsibility for your employees. They deserve it!
David Blaylock is the Head of Advice and Compliance at Origin.
We scored companies based on these measurements:
Price (50% of score): We averaged the no-exam life insurance rates for males and females in excellent health at ages 30, 40 and 50 for $500,000 and $1 million and a term length of 20 years.
Maximum face amount for lowest eligible age (10% of score): Companies with higher no-exam life insurance coverage amounts for the lowest age earned more points. Note that maximum no-exam coverage can sometimes become lower if you apply at a higher age.
Age eligible for best length/amount (10% of score): Companies offering no-exam life insurance to folks over age 50 earned extra points.
Accelerated death benefit available (10% of score): This important feature lets you access part of your own death benefit in the event you develop a terminal illness
Option to convert to a permanent life insurance policy (10% of score): This is a good option to have in place if you decide you want a longer policy, especially if your health has declined and you don’t want to shop for new life insurance.
Guaranteed renewals (5% of score): This option lets you extend the coverage after your initial level term period has expired, such as at the end of 10, 20 or 30 years.
Renewal rates can be significantly higher, but renewing can provide extended coverage to someone who may no longer qualify for a new life insurance policy because of health.
Median time from application to approval (5% of score): We gave more points to companies with lower no-exam life insurance approval times.
The timeline for approval could be within seconds or a month, depending on the company and possibly even your health.
Sources: Bestow, Ethos, Fabric, Haven Life, Jenny Life, Ladder, Policygenius and Forbes Advisor research.
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