Is education really education?

When a tree falls in the forest, does it make a sound? With the sensibilities of that question in mind, I ask you: When an individual receives an education, but does not apply it, is it still an education? While the answers to both those questions are a seemingly obvious 'yes,' a credible point can still be made from them.

I discovered an advisor the other day, who had earned the majestic CFA. The Chartered Financial Analyst designation exemplifies a mastery of investment analysis. It brings instant credibility and respect to the holders' ability to analyze stocks and bonds competently. It is a staple for every analyst...or aspiring analyst....as well as hedge and mutual fund managers.

The CFA requires three exams and several years of experience. You don't simply wake up one morning and decide to write a CFA exam. Anyway, I was a little puzzled when this advisor invested his clients exclusively in wrap accounts, a means of empowering a third party to manage an investor's portfolio for a flat quarterly or annual fee. Essentially, it puts the entire portfolio on auto pilot, so the advisor can focus on other dynamics of their clients portfolio (like their clients' financial plan or tax savings, for example).....Well, this is the justified rationale. However, the truth of the matter is that it could just open up time for them to go recruiting other clients or, for that matter, just relax and enjoy life.

The point is that this method of investing removes portfolio management, asset allocation and, more significantly, investment analysis from the advisor's responsibilities, which are very possibly attributes a prospective client looks for in a financial advisor. This CFA he worked so hard to earn is simply there to more adequately sell himself to the client....it seems. A client will obviously be dazzled by an advisor, who holds the same qualifications as a hedge fund manager or investment analyst. After being left wide-eyed at the possibility of some one-on-one analysis of their investments, the client is being put into investment products that are available to a great many advisors. The advisor's CFA education is not being applied.

A pity, in my opinion. What is the point of an education? To apply what you learn, hopefully. To able society to somehow benefit from it. As it should, the CFA does aid this advisor in attracting clients. Unfortunately, in this case, it's not aiding his clients.