Being recognized by your peers or industry organizations and experts is always rewarding, but the award or title has to mean something or it could do more harm than good, warn some financial advisors and industry organizations.
Some awards can also end up costing the financial advisor or the firm a lot of money for little or no return, experts warn.
It seems to be award season now and advisors can look for nominations in the mail. But one key that should set off warning bells is if the letter asks for any kind of purchase or contribution before the award is even given, the experts warn.
Many critics are hesitant to put their criticisms on the record in case a friend or colleague has accepted a dubious award and is using it as a marketing tool.
"Some advisors may just be naïve and others may take any kind of award or title that sounds good and use it in their marketing material," says Daniel B. Moisand, who is an expert on retirement issues and writes for Financial Advisor magazine and the FA Retirement newsletter.
Moisand and his partners, Charles F. Fitzgerald and Ronald Tamayo of Moisand Fitzgerald and Tamayo of Melbourne, Fla., have each been honored many times by prestigious organizations that look for outstanding qualifications among awardees.
But they have also gotten their share of award notices that do not even have the correct firm name or address or that ask for purchase of an honorary plaque to go with the award. These go in the garbage, Moisand says.
Another advisor's assistant says the firm, which has earned numerous legitimate awards, has gotten notifications for purchases of tables at an awards banquet at $1,000 a person before any award is given.
"We passed on that one," the assistant notes.
Other dubious organizations want commitments to an advertising journal up front or a "listing cost" before someone will be considered as a nominee.
Many award presenters look for outstanding recipients.
The Financial Planning Association presents the Heart of Financial Planning Awards and the P. Kemp Fain Jr. Award each year, but demands substantial qualifications to be eligible and nominations by peers, says Christine Richardson, FPA spokeswoman.
"The Heart of Financial Planning Awards recognize individual professionals, financial planning firms, FPA chapters or organizations who engage in extraordinary work, contributing and giving back to the financial planning community and public through financial planning. Recipients embody the spirit of financial planning and also represent FPA's core values of competence, integrity, relationships and stewardship," the FPA says.
Similarly, the Foundation for Financial Planning, which promotes financial planners giving back to the community through pro bono work for the underserved, presents the Pro Bono Financial Planning Award each year to four individuals who represent entrepreneurial spirit and philanthropy.
An outside group of judges reviews the nominees and selects the winners. The awards come with a financial grant given to the recipients, not a request for money.
Cammie Doder, director of business development, notes that their firm, Aspiriant, and its members are proud of the awards they have received because they admire the publications or organizations giving them out, including the P. Kemp Fain Jr. Award given to Tim Kochis recently by the FPA.
"I would just tell people who are nominated for prestigious awards to put a lot of time into the application process to give a true picture of what makes them outstanding because it is worth the effort," Doder says. "Whether an award is legitimate is sometimes judged by "the approach made to us and what kinds of questions they ask and how in depth the questions are," she adds. A legitimate award presenter needs to be seeking real information that differentiates a firm, not be requesting a purchase or donation of some sort.
Forbes magazine did a large exposé of an award that seems to have no real standing except to sell trophies. It investigated the Consumers' Research Council of America, which purported to put out the "Guide to America's Top Financial Planners." However, no real people could be found behind any of the entities connected with the awards other than SLD Industries, which sells plaques and trophies, among other things, according to Forbes.
"You have to be cautious about your reputation in a competitive world" such as financial planning, says Moisand. "For the consumer, they need to know awards are legitimate and then see if the advisors handles the kinds of issues he or she has."