Respected Financial Industry Veteran Says Select an Advisor Who Meets High Standards; Brokers and Insurance Agents Have a Lower Bar

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Barry Cliff has seen many changes since he founded AFC Asset Management Services, Inc. 25 years ago. The business is more complex; consumers must be well-informed about their investments and work with an asset management firm that has a fiduciary responsibility and an active management strategy. This story points out that broker dealers and insurance agents typically do not have fiduciary responsibility to act solely in the best interests of clients, whereas Registered Investment Advisors, who do have that responsibility.

New products are being created all of the time, and consumers need to understand whether those products are best for them. "Target Date" or "Lifestyle Funds" are popular vehicles..the problem is that no one is actively managing the portfolio of holdings.

Barry Cliff has seen many changes in the financial planning business since he founded AFC Asset Management Services, Inc. 25 years ago. “The business is much more complex; consumers need to be well-informed about their investments, and work with an asset management firm that has an active management strategy,” said Cliff.

A well-respected veteran of the financial planning industry, Cliff was one of the first 100 professionals in the entire nation to earn his CFP® (Certified Financial Planner) designation back in 1977. “Financial planning was not a well-known approach at that time – most people in financial services were salespeople, selling mutual funds, stocks and bonds or insurance products,” he noted.

Cliff felt that the role of a Registered Investment Advisor, which has a fiduciary responsibility to act solely in the best interest of clients, and fully disclose all fees and conflicts of interest, better served his clients’ interests.

“People need a comprehensive plan. Along with giving investment advice, I’ve helped people with their overall financial picture so they can see if they are on the right track to reach their goals,” he explained.

As he built his company through the years, Cliff has worked to further the stature of the financial planning industry. He served as chairman of the Financial Products Standards Board, as an adjunct faculty member of the College for Financial Planning, and was a member of the Ethics Committee of the Institute of Certified Financial Planners. He has also been called as an expert witness in many investment-related court cases.

The first inductee into the College for Financial Planning Alumni Hall of Fame, Cliff said that regretfully, the client-first approach professed by the professional CFP designation has lost much of its meaning.

“Today the financial services industry is dominated by broker dealers and insurance agents, who typically do not have fiduciary responsibility, yet they bear the same CFP designation as those who do. Brokers and agents operate under a different set of rules; their primary purpose is to facilitate buys and sells for a product, which results in a commission -- not to provide investment advice. Their bar is lower, they are only required to provide ‘suitable’ advice,” said Jim Young, vice president of AFC Asset Management Services.

Young, who in the past worked to help shape suitability rules across the industry, noted that investors need to ensure their financial advisor is a fiduciary before they hand over their money.

Financial Products Are More Complex

New products are being created all of the time, and consumers need to understand whether those products are best for them. For example, “Target Date” or “Lifestyle Funds” are popular vehicles for saving for retirement. The ideas is that the younger you are, the more aggressive (and risky) the funds you’re invested in. As you get older, they’re less aggressive.

“These are commonly used in retirement plans,” said Cliff. The problem with the target date or lifestyle funds is that no one is actively managing the portfolio of holdings. Since the portfolio is not managed, there is inherently more risk involved.”

An Active Management Strategy is Key
“Back in the early 80’s, I combined my background in engineering economics and investments to develop the proprietary Dynamic Asset Allocation (DAA) program that makes timely portfolio changes based on current market conditions,” explained Cliff.

“Investment decisions are made according to client risk tolerance; we don’t earn commissions on trades; our compensation is by fee only,” he emphasized.

To help people evaluate and select investment managers, AFC Asset Management Services offers an Investment Manager Qualification Scorecard on their website http://www.afcassetmanagement.com. For more information on AFC contact Jim Young at 301-588-5000, info(at)afcassetmanagement(dot)com.

AFC Asset Management Services, Inc. (AFC) is an investment advisory firm that serves the needs of individual investors and businesses.

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Diane DeMarco

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