Follow Paretto’s Law – or Learn Something Unique and Compete?

By Dr. David Edward Marcinko; FACFAS, MBA, CMP™

[Publisher-in-Chief]

Michael Kitces is an industry pundit, and well known certified financial planner [CFP], who writes for a financial advisory and financial planner audience at thewebsite Nerd’s Eye View:

http://www.kitces.com

He is a bright guy, who holds the following professional degrees and designations:

• MSFS – Master of Science in Financial Services
• MTAX – Master’s in Taxation
• CFP – Certified Financial Planner
• CLU – Chartered Life Underwriter
• ChFC – Chartered Financial Consultant
• RHU – Registered Health Underwriter
• REBC – Registered Employee Benefits Consultant
• CASL – Chartered Advisor of Senior Living
• CWPP – Chartered Wealth Preservation Planner

Yet, in a recent essay, he laments that all the CFPs® in the country added together don’t have as much reach, or impact, as three mass marketing gurus: Suze Orman, David Bach, and Dave Ramsey. And, he is correct.

Markets Vary

These gurus, and the CFPs®, serve different markets for sure. The gurus’ products are free or inexpensive. Their messages are simple and actionable. Once you go beyond the simple messages, however, you will find the gurus no longer satisfying. So, it’s no coincidence that the three gurus focus on controlling spending and getting out of debt. Why?

Eighty percent of us do need to get out of debt and control our spending, period!

Link: Do Financial Planners Have Something To Learn From Suze Orman and Dave Ramsey?

Pareto’s Law

Here is where the mass market is located, said economist V. Pareto PhD more than a century ago. The Pareto principle (also known as the 80-20 rule, the law of the vital few, or the principle of scarsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. It is a common thumb-rule in business; e.g., “80% of your sales come from 20% of your clients”.

Look, most clients can’t control their income but they can be taught to control spending and debt habits [needs versus wants]. Most patients need a family doctor; not a brain surgeon.  And, most of us do not have Einstein’s intelligence, Gate’s wealth, or Hercules’s strength.

But, our lives can vastly be improved by 80%, with just 20% more effort and cost. This is what the gurus know – most of us are average – not so the CFPs® who believe we all need a comprehensive financial plan and have the ability to pay for it and the time to execute and monitor it.

Assessment

And so, CFPs® can’t charge an 80% premium – to 80% of the population – when clients don’t need or want a comprehensive financial plan. Or, when clients can be better off by 80%, and such success can be had for 20% of the cost and effort offered by the CFPs®.

Basic supply-demand economics 101! Ford autos are fine – we all don’t need or want a Mercedes.

More confusing is the fact that even the CFPs® themselves are suspect since prior to 2008 a college degree was not required for the certification mark. And, having same allows the practitioner no additional diagnostic or interventional tools.

IOW: Whatever a CFP® can do – a non-CFP® can do.  And, it is increasingly considered by the well-informed …. to be a marketing mark …. to hold a marketing mark. This is akin to being famous; for being famous.  That’s why I resigned my CFP® mark years ago.

Full Disclosure: I am the Founder of the: http://www.CertifiedMedicalPlanner.org online program. CMP™ certificants – like doctors – hold fiduciary accountability at all times and with unique healthcare industry specificity.

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Filed under: "Advisors Only", Career Development, CMP Program, Financial Planning, Practice Management | Tagged: CFP, CMP, Dave Ramsey, david marcinko, Michael Kitces, Suze Orman, www.CertifiedMedicalPlanner | 6 Comments »