Meet the CPWA, a key designation for serving HNW clients

Stack of books with laptop on wooden table

As the rich get richer and their planning needs become more complex, the bar is rising for advisors who want to serve them. 

Demand is also rising for the certified private wealth advisor certification, an industry credential for advisors who specialize in working with those high net worth clients. 

With the arrival of technology like robo-advisors that can help serve "middle market and mass affluent clients, firms are going to be using their human capital to serve the higher revenue producing clients, which are higher net worth clients," Sean Walters, the CEO of the Investments & Wealth Institute, said in an interview. The IWI is the organization that oversees the CPWA credential, and it tends to see more applications for the CPWA than for the other advanced practitioner credential programs it oversees. 

"In order to serve clients with over $10 million, a lot of firms are starting to say, 'You've got to have a CPWA,'" Walters said. "'Because we need to protect ourselves from liability. We need to protect the client from you not knowing what you're doing.'" 

Firms that shell out to help their advisors obtain extra credentials like the CPWA can get an edge in the recruiting market, Walters said. Many firms, recognizing the need for upskilling their advisors to stay competitive, have partnered with the IWI to create private training programs. 

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Baird is the group's oldest private training partner, and Merrill Lynch is the largest such partner, a spokesperson for IWI said in an email. Newer partners have included Osaic and Commonwealth Financial Network. "The IWI team is collaborating with Osaic leadership to roll out an in-house CPWA training program," the spokesperson said in an email. 

Leslie Roper Day, an advisor who is the founder of Leslie Roper Day & Associates, an affiliated branch office of Commonwealth based in Folsom, California, said Commonwealth's newly launched program for advisors to obtain the CPWA helped persuade her to obtain the certification, which was a time-consuming process. The course taught "really in-depth material," she said in an interview. "There were mountains of reading." 

It helped that she was going through the course as part of a cohort of 50 at Commonwealth taking it at the same time, Roper Day said. "I really liked the camaraderie." 

"This is an area where Commonwealth advisors have become more and more competitive, which follows a trend that independent firms are gaining market share in the high net worth space," said Kenton Shirk, the vice president of practice management at Commonwealth Financial Network. Shirk said advisors had been asking for more support in growing their practices organically, and Commonwealth chose the CPWA for the level of "technical depth" it offered. 

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The firm's pilot in-house CPWA training program took a year to launch. In January, 50 candidates — 41 advisors and 9 home office employees — began self-study for the program, which involved around 10 hours a week, Shirk said. Then in June, the cohort attended a weeklong training at the University of Chicago Booth School of Business, and they began sitting for the exam over the summer — with a "significant" number of the cohort members having already passed, he said.  

Below, Financial Planning presents a brief guide to the CPWA. 

Who should get the CPWA

The CPWA certification is intended for mid-career, established wealth management professionals who want to appeal more to high net worth and ultrahigh net worth clients. 

Recently, many independent broker-dealers have been seeking out the CPWA for their advisors, Walters said. On the whole, those holding it come from across the industry — wirehouses, IBDs, RIAs, banks and other wealth management firms.

The average advisor at a CPWA practice is 48 years old and has been in the industry around 11 years, according to the IWI website. They have an average client account value of around $3.7 million, compared with only $1.4 million for the typical advisor, the IWI said — adding that their practice earns 43% more in revenue, with overall client assets rising to four times more assets than non-CPWA practices. 

Most CPWA holders operate an advice-oriented practice, according to the IWI website. "It's really been seen as the post CFP," Walters said, adding that he hoped to grow awareness of the CPWA among CFP holders. CFP holders, he said, have "have a core foundation of financial planning. If you serve high net worth clients, you need to know more in a lot of different areas that wealthy clients deal with." 

Mirroring the rest of the industry, the CPWA world is heavily skewed male — 85% of holders are men, and only 15% are women. Currently, there are 3,496 active CPWA holders. 

Why it's unique among certifications

To qualify for the CPWA, an advisor must already possess one of a few major industry credentials, such as the CFP or CFA. A bachelor's degree in any field can also apply, a spokesperson said. 

In addition, the candidate must have already worked for at least five years in financial services

"I'm not aware of any that have more than five years, or even five years," Walters said of other credentials' experience requirements. "Most are three." 

The CPWA is also "really the only credential that is focused on households with $5 million and up," Walters said, adding that it offers training in "advanced estate planning, advanced tax planning, charitable giving, all of those more complex issues that wealthy clients face." 

Other potential perks

Roper Day said she had found the emphasis on behavioral finance helpful in the CPWA training. It helped her "relay information in a way that [clients] are going to understand, and accept it." 

How to get the CPWA

The IWI website offers extensive information about the certification. In addition to the above requirements, the advisor must submit an online application and submit to a background check. If approved, the advisor must pay for one of two educational training programs through either Yale University School of Management or Chicago's Booth School. 

The cost of each program is $7,295, inclusive of the initial application and background screening fees as well as a first-time exam fee. The training is mostly or entirely virtual and self-study-based, with an exam at the end. The pass rate for the exam in the past two years has been around 72% to 79%, a spokesperson said in an email, adding that in prior years the pass rates were "at an equivalent level as current pass rates." 

How to keep it

CPWA holders must renew their license every two years, paying a fee and completing at least 40 hours of continuing education credits in the meantime. At least two of those hours must be about ethics, and at least one must be on taxes and regulation. In addition, they must remain in good professional standing. 

"The CPWA and all of our certifications require the individual to follow our Code of Professional Responsibility," Walters said. One of the code's seven principles requires the credential holder to put client interests "first and foremost above the interests of the firm or any other interests." The holder must also disclose all conflicts of interest. 

The IWI enforces conduct rules for maintaining the CPWA designation, and violators will be judged based on the standard of care in their line of work in the industry, Walters said. 

"So if it's a brokerage engagement, then they look at suitability. If it's an advisory engagement, they look at SEC [standards], and if it's a retirement engagement, then it's ERISA." 
Correction
This story has been corrected to reflect that Leslie Roper Day & Associates is an affiliated branch office of Commonwealth, not an RIA affiliated with Commonwealth.
November 10, 2023 12:49 PM EST
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