As professionals in the financial services field, we all know the value of hard work and experience. Ours is a business without limits. Our ability to earn is directly proportional to our ability to communicate effectively with our clients and service their needs. We have been taught from an early age that if we want to earn more, we have to be willing to work. It is a simple equation; hard work equals income.
But there is another part of this equation that we might be missing: education.
As the president of the American College, no one needs to convince me of the value of education. I see it every day.
I see it in our students as they build connections between coursework and customer service as part of the lifelong learning process.
I see it in our alumni as they enthusiastically tell me how their success is a direct result of the education they received.
I see it in the investment financial firms make in the professional development of their employees, elevating the professionalism and productivity of their workforce.
Last year, Penn Mutual contributed $500,000 to establish the Charles E. Drimal Professorship in Estate Planning. Penn Mutual made this contribution not only to honor a great man, but also because the company understands that the more knowledgeable its staff becomes, the more satisfied its clients will be. Increasing the level of customer satisfaction translates into higher levels of client retention and company profitability.
And it isn't only senior management who understands the value of education. It was Penn Mutual's employees who contributed to the Drimal Professorship, receiving a match from their company. These efforts by private persons demonstrate the value our alumni place on their education.
In the coming years, the American College will need to serve the needs of a more diverse tapestry of financial organizations, each looking to provide consumers with high-quality financial products and services.
In the past decade, the companies seeking the education offered by the American College have changed drastically. It used to be that the top five companies the college served all came from the insurance business. Today, our major clients represent a mixture of leading insurance, securities, and investment companies.
With the death of the Glass-Steagall Act in 1999, many banks are starting to offer services in the financial adviser field, either in the form of annuities or mutual fund-based products. Only 50% of United States families own mutual funds. At the same time, it is estimated that banks hold more than $100 billion in excess capital.
Banks aspire to garner their customers' investment assets. They have bought dozens of retail brokerage firms since mid-1997. They started first by creating their own money market funds and then created their own mutual funds.
Banks also are moving into the insurance field. Reports estimate that banks and thrift institutions sold $526 million in new life insurance premiums in the first six months of 2004. They are estimated to have a 40% share of the fixed annuity market.
This convergence of market opportunity and companies with the resources to invest in employee development will drive demand for programs from educational providers who can help companies cultivate knowledgeable associates dedicated to serving these potential clients.
Helping to meet this need is a new designation from the American College called the Financial Services Specialist (FSS). This course offers introductory product knowledge and sales skills and will fulfill the training needs of insurance, securities, banking, and accounting professionals interested in effectively and ethically serving their clients' financial planning needs.
Today, a variety of financial organizations are converging on these emerging markets. An institution that cannot grow its client base will be left behind by more aggressive and adaptive companies.
At the same time that companies are undergoing change and experiencing increased competition, the clients they seek to serve also are changing.
Half of the 77 million-strong baby boomer population will retire during a five-year period starting in 2009. This will double the number of retirees in the U.S. It is estimated that every eight seconds, a boomer turns 50.
With baby boomers nearing retirement, the U.S. is on the verge of the largest wealth transfer in its history. Boomers will need to plan for managing nearly $20 trillion in assets.
The American College responded to this need with the creation of the Chartered Advisor for Senior Living(TM) (CASL(TM)) designation. This designation provides professional financial advisers with the specialized knowledge necessary to serve the needs effectively of retirees and those preparing for retirement. Having a better grasp of the specialized needs of seniors will enable CASL(TM) graduates to provide stronger, more client-focused financial advice.
These two designations came about because the changing market created demand for them. When the market changes again -- and it inevitably will -- we will revise our current offerings and create new programs that will enable the financial services professional successfully to embrace that change.
Changes in market conditions are not hurdles that financial professionals need to overcome. Rather, they are opportunities for success for the educated, ethical, and experienced professional, provided that person is willing to invest the time and effort needed to expand his or her skill set.
And the more you learn, the more you earn. A 2003 American College survey of students and designees indicates that CLUs and ChFCs earn 34% more than their peers. And those who have earned both designations earn 40% more.
Business, whether financial planning or a fourth grader's lemonade stand, runs on the same principle: The company that can provide the clients with the best products and services wins. In financial services, the key to success is knowledge.
For the financial services professional, the key to success is hard work, dedication, and education. The ability to adapt to both the changing market and the needs of their clients will ensure that producers have a growing client base. The saying "Don't work harder; work smarter," never has been truer.
Larry Barton, PhD, is the eighth president and CEO of the American College. Dr. Barton is the author and editor of four textbooks devoted to enhancing and expanding students' understanding of financial and business risk. As a consultant, he has helped such organizations as British Petroleum, the Walt Disney Company, Honda, and ExxonMobil to improve their business functions and strengthen their ability to handle unexpected challenges.
