by Cynthia Harrington CFA
The CIMA designation, an acronym for certified investment management analyst, may not be as immediately identifiable as other financial designations. Nevertheless, it often is most applicable to what the holders of that credential do for clients.
Benjamin A. Tobias, CFP, CIMA, CPA, of Tobias Financial Advisors, in Plantation, Fla., said that he earned the CIMA designation because, "I wanted to expand on the CFP training. The concept of the CIMA is overall portfolio evaluation. Now, I go out and really learn what money managers are doing or not doing."
Granted by the 3,000-member Denver-based Investment Management Consultants Association, the CIMA designation is held by more than 1,800 individuals globally. Candidates must have three years verifiable experience in investment management consulting and must spend at least 50 percent of their time on manager search due diligence, performance measurement and monitoring, designing investment policies or guidelines and structuring asset allocation strategies.
The independent knowledge of portfolio strategy prompted Edward T. Regan, CIMA, Managing Principal of the Regan Group, in Omaha, Neb., to be in one of the first CIMA classes in 1988. Regan had spent nine years as a CPA for national and local firms before becoming registered with the New York Stock Exchange and working for two national wirehouses.
As branch manager at E.F. Hutton, Regan received training in every area of the firm, including separate accounts. He put that to use when his sister received a large insurance settlement. "I didn’t want to manage her account myself," explained Regan. "So I hired separate account managers. They did better than I did over time, so I gradually switched my business over."
He continued, "In fact I was the only one in the office able to be interviewed on TV after the 1987 crash. My clients were still in good shape."
The designation is granted after successful completion of the educational program and a four-hour exam. Matthew J. Aquilia, CFP, CPA, CIMA, personal financial consulting at Ernst & Young LLP, in Cincinnati, got his certification at the Wharton School, in Pittsburgh. "We had top notch professors teaching courses."
Tobias took the same course. "We had 25 to 30 people in class. We lived with them day and night. It was kind of like going back to college," explains Tobias. "I keep up with this group afterwards. We swap ideas about how we’re using the materials."
The Wharton course is what is known as Level II. Most candidates have a basic fundamental knowledge of investments because they have taken the Level I self-study and exam, as well as being experienced professionals.
Designees report that it’s not just the course work that’s beneficial: There are ongoing educational opportunities through IMCA, as well. IMCA sponsors two national and several regional conferences each year. Conferences update attendees on attribution, asset allocation, economic outlook and style predictions.
IMCA also distributes industry information and academic research through the monthly newsletters, The Monitor and The Journal of Investment Management. IMCA also administers compliance with the ethical standards accompanying the designation and takes away the privilege of using the designation for infractions of ethics rules.
And advisors don’t apply their CIMA knowledge solely to separate accounts. Aquilia finds the knowledge helpful for clients using mutual funds. "In our quarterly meetings, I’m able to explain fully why a mutual fund performed the way it did," he said. "I’m able to explain their reports, attribute performance and discuss performance relative to the benchmarks."
We’ve got some sophisticated clients. They ask how we arrived at certain numbers. They want to know how beta and alpha are calculated. Now, I can answer them, as well as explain how the results would change if certain factors change."
Aquilia applies his CIMA knowledge to the overall planning process. "We make sure the client develops and understands their stated goals and objectives. We help coach the client to that end, so we understand their risk tolerance and goals," said Aquilia. "We’re really creating a business plan for their investments."
Big Five firm Ernst & Young encourages specialties within the firm. The CFA on staff helps with in-depth analysis when they go out to visit clients. Aquilia and other CIMAs across the country lend expertise in portfolio construction and management. "Now I understand our service much better when selling to clients. We have our own program but, now, I understand the background of the elements."
Tobias, too, uses mutual funds and separate account managers. He puts the knowledge of evaluating the skill of active managers to work in a different way. "This program gives one the skill to be able to look at active managers and select those that will do better in the future," says Tobias. "But the more knowledge I have, the more I am convinced that active management doesn’t add value, especially in major asset classes."
Clients responded favorably to Regan’s added education. "They appreciate that I’ve taken the time to become more knowledgeable," he said. "And rightly or wrongly, clients also feel those with the designation are a level above those without."
The relatively small number of CIMAs makes them somewhat of an exclusive club. Dwarfed by the CFP community at 39,000, the knowledge base appeals to an older and more experienced crowd.
Tobias taught the investment portion of the CFP program for many years. He recommends that every CPA who’s really doing financial planning and investment advisory should get the CFP. "The financial planning education is the broad body of knowledge that is essential for planners to be professional in their handling of clients’ affairs, and it’s well known by the public. I have gotten clients from CPAs who immediately went out and got Series 7 licensed and started to sell products," said Tobias. "The clients ended up unhappy with the products but still wanted an advisor relationship with a CPA."
After the CFP education, Tobias recommended the CIMA. "The CPA advisor who wants to do true investment implementation and really wants to understand what’s going on should pursue the CIMA."
Aquilia said that the CFP training was very helpful. He compares the two as the CIMA being an entire course on the CFP section on investing. "But I would recommend the broad education and training of the CFP to anyone," he said. "It’s the CFP training that allows me to answer the great variety of questions I get from clients."
Regan predicted that the specialized knowledge of the CIMA will continue to be in great demand because the clients are getting larger and more sophisticated. "I think the CIMA will eventually become to investment managers what the CPA is to accounting today."
