In the ten years ended December 31, 2010, IMCA nearly tripled in size to 7,917 members, while the FPA membership dropped more than 15%. The IMCA membership has also grown amid the last three years of financial crisis and recession.
The IMCA, besides being a membership group, also licenses advisors in much the same way as the CFP Board does. About 80% of its members hold the Certified Investment Management Analyst designation, and 5% are in the process of getting the designation, according to Sean Walters, the CEO and executive director of the organization.
Getting the CIMA designation starts with a self-study component followed by a qualification exam, with a first-time pass rate of 55% and a cumulative pass rate of 60%, says Walters. While most candidates take a couple of years of study and pass the qualifying exam, it can be done in just a few months.
Once you pass the qualifying exam, you're eligible to attend a five-day course of study at the Aresty Institute of Executive Education at the University of Pennsylvania's Wharton School. At the end of the five-day program, Wharton gives CIMA candidates an assessment, and those who pass are eligible to take the CIMA certification exam, which is administered three times a year. The entire process costs about $7,500, most of which is for the week at Wharton, says Walters.
Most IMCA members historically come from wirehouses, and IMCA does not advocate for its members, nor take an advocacy stance on the fiduciary issue. That has allowed it to continue growing without alienating either its traditional wirehouse constituents or the growing number of RIAs joining. As more CIMA wirehouse brokers go independent, the influence of CIMA on RIAs is growing.
Walters says about 55% of IMCA's 8,100 members are employed by a Big Four wirehouse, while 22% are either RIAs or dually registered as an IA rep and registered rep, and 15% are asset managers, wealth managers and wholesalers. The rest work for banks, regional B-Ds or trust companies. The fastest growing membership segment is RIAs, says Walters-the same advisors the FPA targets.
Along with the fact that obtaining a CIMA designation is much easier than getting a CFP, another factor that may make the CIMA approach appealing to independent advisors is the CIMA's direct approach to the business. Financial advisors get paid for investing, and investing is the focus of the CIMA program.
In contrast, financial planners have trouble getting paid for writing financial plans. That's because many of the people who are willing to pay for a financial plan are so wealthy that they don't need a plan; they'll never run out of money. Meanwhile, the people who do need a comprehensive financial plan, because they could indeed run out of money late in life, are too strapped financially to pay for a plan.
The other membership group that is gaining traction with independent advisors is the CFA Institute. To earn the CFA designation, candidates must pass three exams, which each take the average successful candidate 300 hours, and also have at least four years of work experience in the investment industry. It takes most CFA candidates two to five years to pass all three exams, according to CFAI, and it costs as little as $2,175 for the entire program. The CFA Program is a graduate-level credentialing program that links theory and practice with real-world investment analysis, valuation and portfolio management. Of the credentials for investment professionals, the CFA is widely regarded as the one most difficult to earn.
While the CFAI says fewer than 20% of those who start the program complete it, there are 100,000 CFAs worldwide and 54% of them are in the U.S. Of the 100,000, about 30,000 provide advice to private clients, according to Stephen Horan, who heads the CFAI's private wealth manager division.