Financial Reform Will Lead to Emphasis on Credentials: IMCA CEO

Financial reform will lead to a new emphasis on credentials in the financial services industry, which puts the Investment Management Consultants Association in a good position, says IMCA Executive Director and Chief Executive Sean Walters.

IMCA, the Investment Management Consultants Association, provides credentials and education to the wealth management industry and is growing. Last year, IMCA’s Certified Investment Management Analyst certification became the first financial services credential certified by the American National Standards Institute. 

We caught up with Walters to talk about what is next for IMCA ahead of its annual conference this week, which is expected to draw 1,500 attendees in National Harbor, Md.

Q: Last year we talked about the record growth IMCA had seen. Is that something you’ve seen continuing?

A: We’ve had another strong year at 7% growth this past year. Over the last three years, we were at 25 or 30%. This has us now, I guess, closer to 40% over three years. [We have seen] continued growth within the independent advisor segments. More independent advisors are finding us. I think more advisors are just coming to check out IMCA’s conferences. So, for example, about four years ago, I would say roughly 5% of our new members came from someone who joined IMCA to go to a conference. And this past year, that number was I would say 16% with our join and go percentage of new members. So it’s tripled the number of people who just come to an IMCA conference and join us to check us out that way. I think it’s because our conferences are getting out there, people want to come and attend them, and so they’re signing up.

Q: And are you finding a parallel between event attendees and who’s actually becoming more involved with the organization and getting designations?

A: One thing I’ve noticed this past year—since I’ve been at IMCA for about five years now, and before that I was at FPA, so I worked with a lot of independent advisors—it’s just the trend line for independent advisors who are coming into IMCA. Three or four years ago, people would join IMCA because they wanted to become a CIMA (Certified Investment Management Analyst) certificate. Last year, we talked about people joining IMCA because they wanted to become a CPWA (Certified Private Wealth Advisor) certificate. That’s the front door for a lot of our memberships. And this year, we’ve seen that still. I want to say [it’s] 75% or 80% of where we get our new memberships. But people joining for the sake of conferences or Best of IMCA, (a series of one-day seminars), or some other reason to just check us out, is where people are coming first. It is a driver in the increased number of independent advisors who are earning the CIMA certification. They’re coming to a conference, they’re learning more about the type of content we offer, and then they’re signing up for the CIMA program or CPWA, depending on what type of practice they run and which one is more relevant to the advanced competence they need.

Q: Has financial reform impacted the structure of your credentials or the way that you do business at IMCA?

A: I don’t think it’s changed any of the way that we do business. I think if anything it adjusts the topics that we cover as part of our certification programs. In both programs, we have a knowledge domain, which is a fancy way of saying a bunch of topics. They have to learn our ethics code, they have to learn regulatory and legal requirements for different advisor and consultant roles. And so it’s adjusting those topics, because the dust hasn’t settled yet. When it does, that will affect the exams content, and it will affect what they teach in the classroom.

Q: How long do you think that would take to have an effect?

A: The CPWA and CIMA certification are both conducting what we call a job task analysis. It’s basically a survey that certification bodies send to a profession, [to] have the profession define the knowledge, skills and competencies that should be required for the profession. CFP has done this for a number of years. That’s how, in my opinion, financial planning was defined, was through the CFP Board of Standards job task analyses that they’ve done every four or five years for the last 20 years. If anybody ever asks what’s financial planning, they can go review the topics that are tested for the CFP to define that. And that was the first step in our accreditation process for the CIMA certification. We’re conducting that for the Certified Private Wealth Advisor credential this year. Those task analyses will define the topics that need to be tested. I’m certain that those topics will include regulatory and legal issues. As soon as those issues are settled by regulators and Congress, then our exam item writers can start to work on crafting different exam questions. About six months after the dust settles, we can have new exam items that are being tested.

Q: Are there other changes that advisors can expect coming up from IMCA?

A: With the ANSI (American National Standards Institute) accreditation that we earned a year ago this month, we’re finding that that’s changing the conversation with a lot of firms. And it’s changing the conversation that we have, quite honestly, with regulatory groups, with consumers and with employers. The way it changes the conversation is so many letters behind advisors names in our industry today represent strong education, so you go to a weekend class and dive deep on a specific topic, you earn some marks, you put it behind your name. But that’s not what certification is all about. To have a third party organization like ANSI, which accredits multiple certifications in all industries, for us to be the first U.S. credentialing organization to receive that accreditation in financial services, it changes the conversation. So that’s one trend we see that’s going to continue. As the financial reform dust starts to settle, I think a lot of these regulators are going to turn to credentials, and we’re well positioned in that regard.