Financial Services See Boom After Recession
May 16, 2011 (Knight Ridder/Tribune Business News) A recession is just the ticket for starting out as a financial consultant.
So says Pamala Koonz-Canarie of South Portland, who attended a lecture earlier this month about money management at the University of Maine at Augusta.
"I'm going to go into clients' homes and sit down and work with them," Koonz-Canarie said. "The idea is that we'll be a team. I'll help them build a budget and get spending under control."
Financial planning used to be a service for the wealthy. But with the recent recession and money being so tight, financial planners are now serving the crimped middle class.
Koonz-Canarie said she wants to be a hands-on budget management consultant.
She doesn't have a financial background but has been researching and putting together a business plan.
"It's extremely important now, with college students coming out of school with a large amount of debt," she said. "You just can't put your head in the sand and just not pay loans. It's good to work with a consultant and put a plan together."
While other companies are marketing financial planning services, the field is still open to independent consultants, who can be people with backgrounds in accounting, law, insurance or banking.
A financial adviser has to be registered by the state and licensed.
Doug Dunbar, of Maine's Department of Professional and Financial Regulation, said there are various types of professionals and companies that describe themselves as financial advisers.
"If a person is giving entirely free financial advice, and is not entering into a financial arrangement with a consumer, a license would not be required," Dunbar said. "If the person or business is being paid a straight fee simply to give financial advice, but is not accepting or handling the consumer's money (or) assets in any way, a license may not be required but that person or business should contact the department to be sure."
He said the Bureau of Consumer Credit Protection licenses and regulates debt management service providers, which provide financial counseling services and also may enter into an arrangement with consumers to help pay creditors and resolve payment issues.
In 2001, 17 debt management service providers were licensed by the bureau. Currently, the state has 37 licensed main offices and 18 licensed branch offices, he said. Most are based out of state.
The Office of Securities, also within his department, licenses a number of entities involved in the sales of securities and the management of a client's assets. One entity licensed by the office is the investment adviser, also referred to as a financial adviser.
"Investment advisers make investment recommendations to clients, conduct securities analyses in order to make sound recommendations, and manage the client's assets," he said. "Most investment advisers charge either a flat fee for their services or a fee based upon a percentage of the assets being managed by them."
Dunbar said investment advisers are either regulated by the federal Securities and Exchange Commission or a state regulator, such as Maine's Office of Securities, depending upon the total amount of client assets the adviser is managing.
Currently, investment advisers with up to $25 million in assets under management are regulated by the states. That amount will be increased to up to $100 million in assets under management effective July 2011, as required by the new federal Dodd-Frank Act, he said.
At the end of the 2010 fiscal year, the Maine Office of Securities had 944 investment advisers either licensed by the office or registered with SEC, compared to 633 at the end of fiscal year 2002; and 1,827 investment adviser representatives licensed with the Office of Securities.
Investment adviser representatives were not required to be licensed until fiscal year 2003. By the end of that fiscal year, the Office of Securities had 698 investment advisers licensed and 906 licensed investment adviser representatives.
Delivering meaningful customer service in tough times is paying off for financial planners, with the vast majority of consumers saying they trust their own planner, according to the First Command Financial Behaviors Index.
The Index, which addresses trends in financial behavior, said "consumers are looking for a professional, someone who is willing to listen and is committed to providing honest guidance and patient advice. What they want is a personal coach who will help them on their way toward long-term financial security."
"Americans who choose to work with a financial planner receive a unique combination of economic and emotional assistance," said Scott Spiker, CEO of First Command. "The professional advice and service offered by planners generates important fiscal benefits for consumers . . .Through personalized advice and knowledgeable service, financial planners deliver a sense of security to consumers as they work through our sometimes challenging economic environment."