#FASuccess Ep 082: Insights From The History Of Financial Planning Since The First CFP Class with Ben Coombs

What You’ll Learn In This Podcast Episode

• The history and evolution of financial planning. [10:10]
• How the financial planning approach fundamentally changes the questions we ask our clients. [14:23]
• What it was like to be part of the first class of CFP certificate recipients. [16:50]
• Challenges that set back the early financial planning movement. [22:58]
• Why the professional association for CFP participants split from the broad Association for Financial Advisors and took nearly 25 years to be rejoined as the FPA. [32:24]
• Why it’s so necessary to sometimes give things up in order to move forward. [37:04]
• The lawsuit that actually caused the CFP board to be created as a spinoff from the College for Financial Planning in Denver. [38:22]
• How all of the common industry debates and issues we have today are not new and have repeated themselves every decade since the beginning. [1:00:35]
• Why it’s crucial that you’re the one to deliver important news to your clients – even the bad news. [1:09:03]
• What every financial advisor should be doing to advance their own careers. [1:23:04]

Resources Featured In This Episode:

• Ben Coombs
• #FASuccess Ep 019: The Evolution of a True Financial Planning Profession with Bob Veres
• Why CFP Professionals Can’t Just Say They’re A CFP
• The 13 Best Conferences For Financial Advisors To Choose From In 2018
• FPA Residency
• Wealth & Work
• The History of Financial Planning by Denby Brandon & Oliver Welch
• FPA Annual Conference

Full Transcript: Insights From The History Of Financial Planning Since The First CFP Class with Ben Coombs

Michael: Welcome, everyone. Welcome to the 82nd episode of the "Financial Advisor Success" podcast. My guest on today's podcast is Ben Coombs. Ben is the former owner of Petra Financial Advisors, an independent advisory firm that he built and ultimately sold to a successor when he was ready to retire, and is now retired after nearly 40 years of experience as a financial advisor. But what's really unique about Ben is the fact that he was a member of the very first class of CFP certificants in 1973, and was subsequently involved in the formation of the Institute for Certified Financial Planners, also known as the ICFP, later that year, and was a member of the Board of Directors of the CFP Board in its early days. In other words, Ben has actually lived and been a part of the entire history of the movement of financial planning from the very beginning.

And in this episode, we talk in depth about the history and evolution of financial planning itself, from what it was like to be part of the first class of CFP certificants, the challenges that set back the early financial planning movement when it was still largely about using financial plans to sell products, why the professional association for CFP certificants split from the broad association for financial advisors and took nearly 25 years to be rejoined as the FPA, the lawsuit that actually caused the CFP Board to be created as a spinoff from the College for Financial Planning in Denver, and how almost all of the common industry debates that we have today, from the sometimes problematic relationship that CFP stakeholders have with the CFP Board to the battles over various forms of advisor compensation are not at all new but have actually been repeating every decade since the inception of financial planning itself.

We also talk about Ben's accumulated wisdom having been a financial planning practitioner and a part of the financial planning movement over his entire professional career, from how the financial planning approach fundamentally changes the nature of the questions we ask of and for our clients, to why it's so necessary to sometimes give things up in order to move forward, whether it's in our own career or for the financial planning profession as a whole, how different compensation models can sometimes unwittingly cause us to collect bad information about the solutions we make available to our clients, and why in the end it's absolutely crucial to be the one that delivers important news to your clients, including the bad news.

And be certain to listen to the end, where Ben shares his wisdom about what every financial advisor should be doing to advance their own careers and the quality of the services they provide to their clients.

And so with that introduction, I hope you enjoy this episode of the "Financial Advisor" podcast and a journey through the history of financial planning itself with Ben Coombs.

Welcome, Ben Coombs, to the "Financial Advisor Success" podcast.

Ben: Well, thank you. I'm looking forward to participating in this. It's way beyond my technological skills, so it's always a mystery and fun at the same time.

Michael: Yes, I appreciate your willingness to take a dive into the modern era of podcasting. So for those who maybe don't know or aren't familiar with Ben, Ben was part of the original graduating class of CFP certificants. He's one of the original CFP certificants. Which basically means when we talk about things like the history of the CFP marks and financial planning profession and financial planning as a movement, Ben has personally lived the entire movement and the history of financial planning.

And that's really my goal in the podcast today is just to understand some of the context of where we've come from for someone who's been through all of this. I know you were...Ben, you were part of the original graduating class of CFP certificants, you were a member of the board for CFP Board, you were chair of the ICFP, which is one of the predecessor organizations for FPA, and I think we'll end up talking a lot about what membership associations once looked like before we got to where we are. And so I'm just...again, I'm really excited to talk about the history of financial planning, for all those who don't know where we came from, and frankly, our sometimes troubled past, from some not great things that happened with financial planning and CFP marks in the early days. Because we can't build a profession for the future without knowing and understanding where we came from to get here.

Ben: Well, I probably ought to say right at the beginning that if you like where you are, don't get too troubled about how you got there.

Michael: All right, well, that's fair. So maybe we're going to disturb a few people who find out a little bit of the troubled past.

Ben: Yeah. But anyway, I hope they learn from this that even though we had a lot of things to overcome, we overcame them. And I think it was a product not only of the people involved, but of the importance in the minds of the public of what we do. It had its own momentum.

A quick story comes to mind. I became a CLU in 1966, and proudly put CLU after my name on my checks, and nobody ever asked me what CLU stood for. But when I became a CFP in 1973, I proudly put that on there. So I had CLU, CFP, and the first time I cashed the check and the teller said, "What's CFP?" And I said, "A Certified Financial Planner." And she said, "Oh, I should have known that. How dumb of me." So it had immediate recognition and a sense of, "Well, that's the way it should be."

Michael: So why do you think that is? Did people know the CLU already? She didn't ask about CLU because she knew what CLU was, but then you added this new CFP thing and it was, "Oh, what's this? I know CLU, what's the CFP?"

Ben: I don't think she knew CLU, but CFP, it just caused her to ask the question. She was just a beginning bank teller, you know, I don't imagine that she .had any contact with CLUs or knew anything about it. But my point is it just seemed to have a ring of authenticity and substance to it that immediately made its presence felt.

Michael: So is that what led you down the road? What led you in, I guess it would have been, what? 1971 or '72, to hear about this thing where someone is making the Certified Financial Planner designation and saying, "I want to get that. I'm going to sign up and be one of the first people to get this new designation." Did it have the same sort of connection to you or was it something else that drove you in the direction of taking the plunge on an entirely new thing?

Ben: I'd been in the life insurance business, as you know, and was successful enough that it was difficult to leave but not successful enough to really make me want to stay. And I took a job as training director for...or assistant training director for Occidental Life, which became Transamerica, which I don't know if it exists anymore. And then from there, I got a job as director of equity training for California-Western States Life, which became part of American General eventually. And I always regretted not having made a success of my life insurance career, but I also knew I didn't really particularly enjoy it.

And so I started playing around with this idea that I thought I had created out of whole cloth in my own imagination about someone that had more arrows in his quiver than one financial product. And I remember doing a business plan and calling it financial planning, showing it to my boss, some people may know his name, Harold Hook, he became president of American General and rather well-known person in the financial and life insurance industry.

But anyway, he encouraged me to go off and do it on my own, and I did. And suddenly, I heard about this organization called the IAFP. I had never heard of it before. And they had a chapter in Sacramento, where I was living, and so I went over there and discovered all these people who were doing what I thought I had created. And I heard about the College for Financial Planning I think at that very first meeting and inquired of it and enrolled right away. My dad was one of the very first CLUs in the United States. Got his CLU designation in about the time I was born, in 1938, and I learned I had a chance to be in the first group to graduate, so I jumped at it.

Michael: So that was exciting to feel, "Hey, it's a new thing. I'm going to be one of the first."

Ben: Yeah, it was kind of interesting. I had doubled up on the CLU exams thinking if I failed one, I at least pass one and I wouldn't lose any time. So I doubled up on the CFP exam. So I got exempted from one because I had a securities license, so I only had to take four out of five. I took the first two in February of 1972. And I remember taking the exam and then the books I had to read arrived after I got home from taking the exam, but I managed to pass them. And then I took the second two in the first part of 1973, and that's how I got in the first class that was given their designation in October in 1973, I think it was.

The History and Evolution of Financial Planning [10:10]

Michael: So can you set a little bit more of the context for us of what was going on at the time? You had this history of being in insurance world where there's just one product in the quiver, right? You only have one answer, so you just keep offering it to people until it's the correct answer to their question and then they'll buy it. And you had this vision of doing something different where you would have more arrows in your quiver as you put it, which I guess would basically be being licensed in multiple areas in a world where at the time, if you were insurance, you generally just did insurance, and if you were securities license, you usually just did securities with not so much crossover.

Ben: I remember in May of 1968, I got a securities license in violation of my career agent's contract with Equitable Life. They could have fired me if they'd learned about it. But I beat them to the punch. I quit the end of June.

Michael: Because they just didn't even want to allow you to have multiple licenses? That's going to be a distraction, or worse, "We don't know how to oversee that, we don't know how to regulate that?"

Ben: Yeah, you were hanging out with the devil if you had a securities license.

Michael: Because they were competitive channels? Just insurance folks didn't like investment folks, investment folks didn't like insurance folks, that sort of dynamic?

Ben: Well, I really don't know. They just...we were taught a lot of things on how to overcome the securities. Now, remember, this is 1968, and most of the attitudes in the life insurance business were born during the Great Depression, and all the way through World War II. Interest rates were quite low. You could make a whole lot more money on a life insurance contract than any other fixed deposit that was available to you. And you could do it without the risk of the stock market. Anyway, it was a religious attitude as well as a attitude that was born out of the reality of the Great Depression and then in the World War II years.

Michael: And the product at the time, it was whole life, right? That was what was sold, that was the only thing that was sold. Like universal equities, they hadn't been created yet because that came in the '70s?

Ben: No, no. Yeah, yeah, no universal life. But we did have whole life and we had retirement income policies that matured for 160% of the face value of the policy at age 65. So for every $1,675, I think it was, was the amount of money you'd get for $1,000 policy. You know, you would have a life income at $10 a month or every $1,675. And you had endowments and you had limited pay life, and you had whole life. And there was term. Occidental Life that I went to work for when I left Equitable Life specialized in term insurance. And they had what they called a two-cycle sales system, where you sold people term insurance, and then you revisited it with them annually to get them to convert it to whole life. I remember they had an actuary there when I was with them who proved that was detrimental to their profits to convert it to whole life because whole life generally resulted in a death claim. Term insurance, eventually, people would drop and it would never mature into a death claim.

Michael: So they had figured out persistency in lapse-based pricing in essence.

Ben: Yeah. But it would destroy their whole sales force if they got rid of their two-cycle sales system, so they fired the actuary.

Michael: So you're living in this world where insurance agents sell whole life insurance, that's what they do, that's the deal, and then there's some investment folks that I guess basically were selling investments against whole life insurance, right? You know, "Don't do those investments. We can sell you stocks and we can give you stocks that will be better than whole life," and having that fight.

How the Financial Planning Approach Fundamentally Changes the Questions We Ask Our Clients [14:23]

Ben: Yeah. I mean, in the International Association for Financial Planners, it was primarily people selling. They were NASD-registered and selling mutual funds and stockbrokers weren't involved in the financial planning world to any great extent at the beginning. I characterize what I did in the life insurance business as being an answer in search of a question. And as you alluded to, I was trained to help people reword their questions, so I had the right answer.

Michael: Wait, wait, say that again. So you were an answer in search of a question and trained to help people reword their questions so that you would be the answer.

Ben: Right. And what I wanted to become was answers in search of questions, and that's how I visualized financial planning. But I must tell you that the people I ran into at the beginning were still...financial planning was a product delivery system for a good number of years. It was a sale system and not a service, you know, to help them sell mutual funds and life insurance.

Michael: You know, we had Bob Veres on the podcast last year. It was episode 19, for anybody who wants to go back and listen to it. And, you know, Bob had talked about this kind of era of I guess the '70s and the '80s where the big focus was needs-based selling and the idea of going to do some..."We're going to do a financial plan so that we can understand your goals and needs," because we were doing needs-based selling. If I can get you to articulate your needs then I just have to have products that answer the needs that you articulate. And as long as I've got a wide enough range of products backing my company, I can find an answer to any need you put on the table.

Ben: Yeah, well, that's correct, but it was a big advancement over what it had been as far as I'm concerned.

Michael: Which was just, "I've got this one product and I'm just going to offer it to every single person I can find until I find someone who's ready to buy it."

Ben: Yeah. And nothing was integrated, you know, more successfully where financially...I'm talking about the clients now. The more advisors you had, you had a stockbroker, you had an insurance agent, you had your CPA and your attorney, and they never talked to each other. So at least on the financial product end, we started to integrate that part of it and cut out some of the numbers of people you had to deal with to have things integrated and coordinated.

Ben's Thoughts on What it Was Like to Be Part of the First Class of CFP Certificate Recipients [16:50]

Michael: So what happened once you got your CFP marks and you became one of the original class of a dozen or two that had their CFP certification, what came next for you in the coming years or in the following year?

Ben: I left California-Western States Life to set up my business as a financial planner in July of 1971, and by the end of 1972, I pretty much had gone broke. I knew what I thought financial planning was but I didn't have the faintest idea about how to go about it or how to talk to people about it. I knew more about what I didn't want to be than what I wanted to be. You know, I knew all about the life insurance business, and I knew I didn't want to replicate that, but I didn't know a whole lot about really talking to people about financial planning.

Michael: I feel like that's still a challenge in our landscape even today that I know a lot of folks that come into the industry and have been doing this for a couple months or a couple of years or even sometimes 5, 7, 10 years and, you know, may have had some financial success or may just be struggling to find some financial success and basically end out stuck in this world of, "I'm not sure what I want to be doing, but I'm getting really clear about what I don't want to be doing." That's tradition on our industry. And then start this searching journey to try to figure out what they do want to do and where they can do it the way that they want to do it, they think clients should be served.

Ben: Well, different than today. Back then, we didn't have any peers that knew what they should do to be a financial planner. So, you know, you couldn't go to an industry meeting or a professional meeting and talk to people about how they were going about things because nobody was really doing it.

Michael: And it wasn't really practical to just google it at that point, not really an option.

Ben: Yeah. And also, the marketplace didn't have any idea what a financial planner was. You had a very basic job to explain it, what a financial planner was, but first, you had to get a hearing to explain what it was, too. So it was a little tougher than I think it is now because you don't have an environment that is conducive to those conversations that you have today. But it was interesting, after I went or almost went broke, I never allow myself to go broke, but almost went broke, I took a job with a real estate syndicator in Southern California that syndicated limited partnerships for California school teachers. And you had to have a teaching credential or be a certified employee, meaning the bus driver, janitor, whatnot in the school. And if you were in one of those places in the educational system, you could invest in these limited partnerships.

And they also sold tax-sheltered annuities. And so I had an environment as divisional sales manager to start talking. And they sold through seminars. And so I had...and school teachers, if you stand up in front of a bunch of school teachers, they listen to you. You know, anybody stands in front of a class is in charge. So I had an environment where I could begin to instruct and teach people about financial planning, both the sales representatives and the clients.

So anyway, I had an opportunity to really learn myself about what financial planning was and how to communicate it to clients. And after a couple of twists and turns after leaving that company, I set up my own firm again, financial planning, and based on that experience I had and the client contacts I had, I was able to get it off the ground this time. But I had one insight that I'd like to share I think was terribly important for my success. When I was in the life insurance business, I always felt that selling was something that I did to somebody, that there was always a winner and a loser. And one of the reasons I wanted to go into financial planning business is that I felt that it was something that I would do for somebody and that I really was in the service business. So I resolved when I went into business that every day I'd be of service to somebody, whether I had an appointment with a client or a prospective client, or whether I had a blank calendar that day, I resolved I was going to be of service.

And so I got involved in the IAFP and I served at the local chapter. I got involved in the chamber of commerce where I was and served that organization. I was involved in my church and served there. I had lots of opportunities to serve in the time between appointments, which was quite a lot of time in those days because I had very few clients to start with. But when you're of service to somebody, they say thank you, and that's a very important thing to hear when you're facing people who are often inclined to say no when you want to get an appointment with them. So I think it was an important way for me to establish a sense of my own worth, vis-a-vis other people. Hearing other people say thank you, and it gave me the strength and the resolve to continue through the thin times to build my business.

Challenges That Set Back the Early Financial Planning Movement [22:58]

Michael: That's an interesting way to frame it, that the early days, well, I guess throughout, but particularly in the early days of trying to form an advisory business, it's so rough and there are so many nos and there's a lot of just negative that comes at you, and it's not hard at all to get dragged down by that. That you essentially made a support system for yourself by volunteering and being active in various community groups, I guess in the profession with the IAFP and locally in your community with the chamber of commerce and your church, because being of service and knowing you're having a positive impact there and hearing people respond and say thank you is just mentally confidence-building and uplifting in a world where the rest the time you're trying to get clients to do business with you and you're potentially getting a whole lot of nos and just lets you feel a little better in the face of the nos to saying, "At least I'm doing these things and being of service and these people are saying yes and thank you."

Ben: Yeah, I keep looking back on that as probably the biggest thing that leveraged the start of my business.

Michael: Because it mentally got you through it or because that local engagement and volunteering and service work ultimately just turned into networking and clients and new business as well?

Ben: Yeah, it sustained me psychologically and emotionally, and it did open doors through contacts with various people in sister professions. I remember working with brand new attorneys and CPAs and holding seminars together. You know, we were helping each other build our businesses.

Michael: So can you talk to us a little bit more about what this world of financial planning and CFPs looked like through the '70s and the first 10 years that you were out doing this? You know, I know this was just...this was the time of high inflation, this was the time of challenging markets, financial planning was still just barely sort of maybe kind of getting known. Help us understand more about what was going on as financial planning I guess at least started to grow. You were part of the first CFP class and not the last CFP class, so that was good. More people showed up. What was it like in those days watching financial planning try to grow and get recognized?

Ben: Well, there was...I approach that from two perspectives. First of all, from the industry side, I remember going to the first conferment for the College for Financial Planning in fall of 1973, and the theme of the conference was mega-selling.

Michael: Mega-selling. "Congratulations, you're all CFPs, now you can do mega-selling."

Ben: Yeah. That was a big banner over the stage.

Michael: Just to draw home the point that in the early days, the CFP...financial planning process was a sales process, not necessarily a service.

Ben: Right. Right. But, you know, it was at that meeting that 15 of us founded the ICFP, which was our first professional organization. So out of the mud, the lotus grows.

Michael: I like that, out of the mud, the lotus grows. So what was going on at this conference? What was the mega-selling theme? I mean, was it really just this, "You can now give people more comprehensive advice, which means you can sell them more products in lots of different directions?" I mean, was that the gist? That was the focus?

Ben: Yeah. I hesitate to go here but I'm about ready to go anyway, that, you know, most of the people that were speakers at conference ended up serving jail time too.

Michael: Actually serving jail time. All right, so this was a rough start. For what? Just bad products, bad sales practices? They were that scummy of the scummy salespeople?

Ben: Yeah, securities fraud, for the most part.

Michael: Okay. So you go to the first conferment of CFP certificants, it's on mega-selling, the speakers end out going to jail for securities fraud, but the ICFP gets founded at that meeting.

Ben: Yes, right.

Michael: So talk to us about the ICFP and just where this came from. As you said, you found the college through the IAFP, so how did this come about?

Ben: Okay. Can I just touch one other thing on the other side from the profession before we go down that path?

Michael: Sure, please.

Ben: You have to understand the marketplace, too. In 1973, the highest tax bracket was 70%. And because I'd worked with school teachers in my prior job, the vast majority of my clients were two-income school teacher families. And most of them were in the 50% tax bracket. So, tax shelters and taxes were a huge driver, both on the selling side and on the buying side. Then we had runaway inflation in interest rates that, you know, hit 16%, 18%. So there was a demand on the side of the customer for all these what proved to be distorted financial products to take care of these high taxation and high inflation problems.

Michael: This was the era of the limited partnership tax shelters.

Ben: Right, yeah. You know, definition of a limited partnership is you have a general partner who has all the knowledge and a limited partner who has all the money. And by the time the deal is over, the roles are reversed.

Michael: All right, wait, wait, you've got to say that again, you've got to say that again.

Ben: Well, definition of limited partnership is you have a general partner who has all the knowledge and a limited partner who has all the money, and by the time the deal is over, the roles are reversed.

Michael: And that's pretty much how it went down, right? Because I know by the mid-1980s when the Tax Reform Act of 1986 came through and kind of simplified the tax world but in the process knocked out a lot of the tax shelters, many of these just literally went bust with zero. The general partner got paid very well along the way, but it's not just like people had some bear market losses, like stocks go down, they were literally wiped out to zero.

Ben: Yeah, right. Yeah, Reagan and Tip O'Neill wanted to level the playing field, but they forgot to take the players off before they leveled it.

Michael: Ouch.

Ben: Yeah. Anyway, to get back to your question, you wanted to pursue about the founding of the ICFP and all of that?

Michael: Yeah. And there was already an IAFP. I think you said literally, that was how you found your way to the College for Financial Planning was through the IAFP. So what was the ICFP and why did you guys feel the need to create some new and different thing when the IAFP was already in place?

Ben: Well, we felt the need to create it because we felt the need to have association of people, like-minded people, apart from the mega-selling aspect of the IAFP.

Michael: So the ICFP was almost a backlash respond? You've got all these new CFPs who came to a mega-selling conference and said, "Oh my God, this is not what we want to do, we need to make something different at the conference?"

Ben: No. We said we wanted to create an organization that would promote the growth of the professional outlook on the planning process in a body of knowledge. And we really wanted to grow the number of CFPs. We all pledged to go back to our communities and start organizing classes to take people through the CFP program. We envisioned ourselves as a part of the IAFP, not separate from the IAFP.

Michael: Okay. So like the CFP, you would be the CFP subsection, subgroup that was under the IAFP umbrella but would help to build financial planning as one of the recognized professions or things underneath this broader IAFP umbrella? The IAFP was the industry and you would be the professional planning services component of the industry?

Ben: Yeah. We made agreement with the IAFP board that we would not form chapters, only study groups. And we proceeded along that line for about four or five years before things happened that we had to leave the IAFP and become a separate organization.

Michael: So you weren't even formally legally a separate organization early on? You really just viewed yourselves as a subset of IAFP, the separate organization came a couple of years?

Ben: Yeah.

Why the Professional Association for CFP Participants Split From the Broad Association for Financial Advisors and Took Nearly 25 Years to be Rejoined as the FPA [32:24]

Michael: So what led to the spin-off and separation then?

Ben: Well, I was a peripheral observer of this, so I may not have all the facts correct, but I believe it was in 1977 or '78, the IAFP had their annual conference in Chicago, probably '78, or it could have been '79, a long time ago. Anyway, the board of the IAFP had decided to become an open forum, and they felt the ICFP was, you know, something that didn't fit in with that open forum concept because we only allowed CFPs to be a member of it, and we're out promoting the designation and holding classes and whatnot. So they came to us. Every annual IAFP annual conference, the ICFP would have their own meeting concurrent with it. And they came to our meeting and told us we had to disband or get out. So the next year in Boston, we held it contiguously but an entirely separate conference from the IAFP, and that's when I came on the board of the ICFP.

Michael: So that's fascinating to me in part because I feel like it's basically still now what? Almost 40 years later, the same debate we still have today in the world of financial planning and membership associations and the FPA in particular of, you know, should the organization be a broad, open tent that accepts anyone and everyone into the financial services industry or should the organization just focus on allowing only CFP practitioners and focusing on CFP certificants? You know, just in the past, I guess, 18 years since the FPA was formed, I think that pendulum has swung back and forth 2 or 3 times in the span of just 18 years already. So it's fascinating to me, this is not just a modern debate we fight about in the industry now. This has literally been 40-plus years of, "Should the membership association be exclusive to CFP certificants or an open forum or an open tent for everybody that touches financial services?"

Ben: Well, haven't they made the decision that the CFP mark is the only mark they'll promote?

Michael: Yes. At this point, FPA is the...in the early years after the merger happened between the IAFP and the ICFP, the organization I think was very CFP-centric, you know, including culminating in its lawsuit against the SEC to, you know, protect the fiduciary landscape in 2005, which was kind of the last big battle before the DOL fiduciary one of the past couple of years. And then in the 2007 to 2013 timeframe, the pendulum kind of swung the other way and the FPA was focusing more on the open tent philosophy. And now over the past couple years, the pendulum seems to be swinging back the other way again, that they've renewed their focus on saying, you know, "We're focused on CFP certificants, we're the largest professional association for CFP certificants."

Ben: And under David Yeske's term, they spun off the broker-dealer community and all that, which I thought was an important step, too.

Michael: Yeah. You know, for those who aren't aware, you know, the Financial Services Institute, FSI, which is now essentially a lobbying and advocacy organization for the broker-dealer community, was originally part of the Financial Planning Association, and it got spun off in, I forget, 2003 or 2004 as a lead up for the FPA to then sue the SEC in 2005 over what at the time was a controversial exemption that was allowing broker-dealers to do fee-based accounts without being fiduciaries. And the FPA wanted to sue the SEC to prevent this fiduciary exemption for broker-dealers. And it had to spin off the broker-dealer division first because obviously, it was not a lawsuit that broker-dealers were very happy about at the time, particularly since the FPA won and once broker-dealers couldn't do fee-based accounts without becoming registered investment advisors and fiduciaries. That was the birth of the hybrid movement. That's why today, almost everybody under a large independent broker-dealer is a hybrid advisor. It was because of that FPA lawsuit.

Why It’s Necessary to Sometimes Give Things Up in Order to Move Forward [37:04]

Ben: You know, that brings to mind another important lesson I think our history teaches. And that is that often to move ahead, you have to give things up. A bird will never fly until his mother kicks him out of the nest. And I remember, you know, we got kicked out of the IAFP nest. I think that was probably the best thing that ever happened to the institute and the growth of the CFP marks.

And then the lawsuit between Adelphi and the College for Financial Planning led to a settlement that created what was then the IBCFP. The college had to give up ownership of the marks in order to preserve them. And it didn't...you know, it benefited both the marks and the college. And then the CFP Board had to turn over, I don't know whether I'm framing this just exactly correct, but they had to give up the control of the marks to the international association for it to grow even more internationally. So there's been a lot of gut-wrenching decisions where you had to give up control of things that you really felt responsible for in order for them to really grow and improve.

The Lawsuit That Caused the CFP Board to Be Created as a Spinoff from the College for Financial Planning in Denver [38:22]

Michael: So can you talk to us a little bit more about the College for Financial Planning and genesis of what we now know as the CFP Board of Standards and the split that came with the lawsuit? Because I think for...you know, most practitioners today I'm not sure are aware that happened since it was I guess more than 30 years ago now, in 1986. Can you give some context to what was going on at the time and what the lawsuit was about?

Ben: Well, the College for Financial Planning, not being all that financially strong, had done a very poor job or maybe a non-existent job of protecting the marks, and Adelphi University in New York, another proprietary college, started teaching CFP courses and awarding the Certified Financial Planner designation.

Michael: So, literally just said, "We're going to start teaching CFP classes and giving out CFP marks," just all by themselves.

Ben: Right.

Michael: "Okay, it's popular enough, we're just going to start doing it."

Ben: So if that had persisted, you know, everybody and his yellow dog would have been doing the same thing and there'd have been no uniformity or control over the quality of the education or the standards of practice or anything.

So anyway, the college sued Adelphi, and after a lot of time and expense, it became clear that the college, this is my take. I was not directly involved, so I may be misspeaking to some extent. But from my perspective, the college came to the conclusion they could not win this lawsuit. And under the guidance of their legal firm, they approached Adelphi about creating the International Board of Standards and Practices for Certified Financial Planners. And I think, you know, both parties were burdened by the expense of all this, and so they agreed to do it. And the college gave up control of the marks to the IBCFP, which later became the CFP Board of Standards just by a name change. So in that...you know, that really was the springboard for creating the professional quality of the marks and the course of studying.

Michael: So early on, when the CFP marks got created, just the College for Financial Planning was the organization, made the marks, conferred the marks, had a trademark. Didn't do the things that you have to do to defend the trademark, and then got stuck at the point of facing the loss of the trademark, I guess agreed to sell the lawsuit by saying, "If we make a separate standards board where anybody can teach the CFP program as long as you meet the standards of the standards board, can we agree to settle this lawsuit and we'll each go our separate directions?"

Ben: Yeah, that's correct.

Michael: I think it's an interesting footnote. You know, I know there's still a lot of tension out there today when the CFP Board does what it does to protect the trademark. You know, a lot of CFP certificants over the years have been in the position of getting one of those little letters from the CFP Board that says, you know, "You failed to put the little circle, our trademark symbol, on your website," or, "You know, the proper use of CFP is always to say CFP practitioner or CFP professional, but it has to be used as an adjective, not a noun. You can't just say you're a CFP." For those of you who are wondering like why is the CFP Board so active about this, this is why. It's not just the CFP Board being neurotic about the issue in trademark law. The only reason the CFP Board exists is because it was originally owned by the College for Financial Planning, and they failed to do all those things to protect their trademark and essentially lost exclusivity of the trademark. It comes from actually learning the hard way.

Ben: And it was a difficult few years. The resistance you see today is nothing compared to what it was when they first started promulgating this practice standard. Jack Blankenship literally had tomatoes thrown at him.

Michael: People actually brought tomatoes to an association meeting to throw them at Jack for putting forward practice standards.

Ben: Right.

Michael: So let this be a note to everyone, this is an example of why it was worse in the past, not why you should bring vegetables to the next CFP Board town hall.

Ben: Right, right.

Michael: And what was going on at the time that people were so upset about it? Just because the standard said if you want to say you're a Certified Financial Planner you have to actually do some financial planning and follow a process and people were that upset about it.

Ben: Yeah. You know, we were a bunch of mavericks, misfits and renegades and, you know, did things our own way. And it's been working all these years, you're not going to tell me to change.

Michael: Right. For all the practitioners that said, "No, no I've been doing 'financial planning,'" maybe in air quotes, but, "I've been doing "financial planning" my way and I'm an incredibly successful producer. See all the products I sold last year and the awards I got for my company, what do you mean I have to do financial planning the way you say?"

Ben: Yeah. So I kept trying to tell them, you know, either the CFP Board is going to come up with these standards or the court system is, I'd much rather have the CFP Board come up with them.

Michael: So tell us a little bit more about kind of this parallel track of ICFP and IAFP. You know, you said the IAFP made this decision in the very late 1970s that they were going to be an open forum and the ICFP's sort of exclusivity towards CFP certificants wasn't working for them, so they pushed you out and then you did your own conference, sort of co-located for a year and then I guess you just went your separate ways. Talk to us a little bit about ICFP or just the different paths of ICFP and IAFP through this time.

Ben: Well, I was on the board of the ICFP and totally involved with that path. And I remained a member of the IAFP through my presidency of the ICFP, which I'm trying to look on my wall here was about 1986, '87. And then I left the IAFP after I finished my term on the ICFP board. So that's all by way of saying that I wasn't actively involved in the IAFP in all their deliberations or activities, so I can't speak for them. But the ICFP grew, both in number and chapters and in members. One of the things that we did early on that leveraged our growth rather dramatically, this was before the college reached the settlement and formed the IBCFP, but the College for Financial Planning decided to give every one of their students a student membership in the ICFP, which led to, you know, vast majority of them becoming members when they got their certificate.

Michael: Interesting. So again, to me, that has interesting echoes of the current environment. You know, one of the big debates between FPA and CFP Board for the past 10 years or so was about whether the CFP Board shares what's known as the list. And the list is the list of recent new CFP certificants being promoted across, promoted to become members of the FPA. And, you know, the list had been shared for a long time I think going all the way back to, as you said here, when the list was shared from the college to the ICFP before IBCFP was even spun off. But the list got, you know, cut off about, I forget exactly when it was, about 10 years ago, as CFP Board arguably rightly in the modern era said, "Isn't this technically a privacy violation of CFP certificants? At least if we're not getting their separate permission to allow this name-sharing to go on."

And it's only a couple of years ago that CFP Board updated its agreements to basically have people acknowledge that they're going to have their name shared to the FPA and NAPFA now. But again, to me just interesting these, you know, things that we fight and debate about in the profession amongst the associations today are literally dynamics that go back 20 and 30 and 40 years of precedents.

Ben: Yeah. And the other thing the ICFP did early on under Henry Montgomery's term as president was to start the retreat, which, as you know, continues today. And that was a catalyst that really unified us as a national organization and gave us some substance and prominence that we didn't have before.

Michael: What was it about the retreat that gave substance and prominence to the organization? How does that come about?

Ben: It was the only educational venue you could go to where it was focused on process and subject matter and not on selling. It was, you know, financial planning process and technical knowledge to support that process.

Michael: Right. Well, we now sometimes call the art and science of financial planning. That's at least the tagline that that retreat had for a bunch of years. I guess it's important to point relative to the other events at the time which had banners that said "mega-selling" across the platform when the overwhelming majority of financial planners or I guess financial advisors were in the product sales business, to have a pure conference on financial planning process and technical knowledge was a incredibly rare thing at the time.

Ben: Yeah. And then I think the fact that we held it on college campuses where, you know, you really were in retreat and you spent...you know, this was before cell phones, and we'd go to places where they'd only have one payphone on the campus. And there was no internet or anything of that sort. So you were not only immersed in the subject matter, but you were immersed with your peers 24/7 for 3 days. And it was a growing and stimulating experience, and it created a comradery nationwide among CFPs that for those of us who experienced it still feel.

Michael: Yeah, it's still long been one of my favorite conferences. It's one that we highlight on our top conferences list every year. You know, that culture of sharing and connectedness at retreat has, you know, held and persisted through the years.

Ben: But moving it into a resort location and with the advent of cell phones and the internet and everything, I think it's much different than it used to be. And I miss the old one.

Michael: Yeah. Well, and I'll admit, it is an interesting thing, you know, when I think back. Again, you know, you were running this as a retreat purely on content, running it on a college campus at a time when all the other conferences were sales conferences, probably at resorts because it was meant to be like a bonus trip for hitting big sales production numbers or, you know, a place for big income sales producers to come to celebrate their success. That there was something I guess particularly unique not even just about the retreat content, but the style and location of the conference juxtaposed to everything else that was happening at the time. And I guess to some extent still.

Ben: So I would say those two events were landmark events in the history of the ICFP. But we both suffered through the '80s with loss of membership, you know, when limited partnerships went under, so many other people went under. I remember "Money" magazine on their 25th anniversary, just about the time that Tax Reform legislation was passed, had a list of the 200 or 250 top financial planners in the United States, and a year later, most of them were out of business.

Michael: Wow. And so even as the non-salesy planning-centric organization, even ICFP in the '80s still had a large contingent of folks that were using these limited partnership tax shelter vehicles that ultimately blew up and either took down clients or just took down the planner's practice along with them?

Ben: Yeah, that's true. And, you know, the fee-only people hurt too. You know, when things are exploding, there's all kinds of ancillary injuries. So I would say, you know, they opened the door for us to start having conversations, the two organizations, about the strength we could have together as opposed to being separate. And there was almost a merger in the late '80s or early '90s when Eileen Sharkey was president of the ICFP. I've forgotten exactly what year that was, but it almost happened then. But I wasn't privy to what went wrong, but something went wrong and it didn't happen. And so in 2000, it happened. And I think everybody is better off because of it.

Michael: What was that like watching the ICFP and the IAFP merge in 2000 having been there 20-plus years earlier when they, you know, drove you out and made you go separate in the first place?

Ben: Well, I was...except for maybe some details, I was all for it. When I was president of the ICFP, I adopted a theme called "Building Bridges." And I tried every which way to reach out to the IAFP. And that opened doors. I was trying to reach out to the American Society of CLU, too.

Michael: Yeah, now the Society for Financial Services Professionals was the Society for CLU ChFCs then.

Ben: The president of that at the time was an agent my dad had hired in the life insurance business. So I had access to him, and we were able to hold a couple three joint board meetings, but that didn't lead to anything. Anyway, I kept trying to reach out to the other organizations to create some unanimity and cross-pollination if possible and even merger if possible. So I was happy to see it happen.

Michael: What were the blocking points that these groups ran in parallel for 20 years and, you know, your various Building Bridges unification efforts didn't manage to get tractions? What was the blocking point? Why was it so hard to get these groups to work together?

Ben: Well, the IAFP had their own designation, registry, the registry. They had a methodology for people with various designations to go through a procedure that would lead to them being qualified to be a member of their registry. So it was not mark-specific.

Michael: Okay, so the registry would be like our modern-day equivalent of a, you know, "find an advisor" website. Like a thing that was marketed to consumers, "Here is a list of qualified financial advisors that you can work with put out by a major association." The caveat was the IAFP allowed the registry to be for people with multiple various designations. And I'm going to presume the ICFP really only wanted CFP certificants in the registry.

Ben: Right. Well, we didn't think there needed to be a registry.

Michael: If you just make it CFP or if you hold out the only qualifying designation is CFP, you don't really need a registry, you just literally find a CFP, right? You only need a registry when you make it more complicated by having lots of designations, some of which qualify and some which don't, and then you have to figure out which ones qualify and don't, you need a registry.

Ben: You know, and this was before there was a requirement that you had to have three years in practice. Is that the requirement now to get the CFP?

Michael: Yeah, three years now. Two years if you do a, you know, full-time apprenticeship-style model, but three years for everyone else.

Ben: So the registry I think had a qualification like that. And then they also had...you had to submit a financial plan to be reviewed. So they had some additional qualifications that becoming a CFP didn't require.

Michael: So ironically, that's sort of in the other direction, isn't it? The IAFP having a three-year experience requirement and requiring a financial plan to be submitted was a more stringent requirement than just getting the CFP marks at the time.

Ben: Now, I don't know whether it was three years or what the experience requirement was, but I think there was one.

Michael: But some experience requirement. Okay.

Ben: But anyway, so as the CFP Board started to adopt those things, it became easier for them to throw their hat in that ring. At least that's my take on it.

Michael: So the real blocking point for a long time was, in essence, the IAFP having a big focus around this registry, which in the most...I guess in the most literal sense was the manifestation of who they viewed as being qualified to do financial advising, and they allowed multiple designations. ICFP only wanted CFPs, but they required experience and a plan to be submitted, while the CFP marks did not. And so, now as we look back, okay, now the CFP Board has a three-year experience requirement, now the CFP Board has a capstone requirement where you have to actually do a plan in order to get the marks. And so, yeah, you can kind of literally see how the requirements of the registry early on became embodied into CFP Board's actual requirements over time.

And some that are still out there today. You know, NAPFA still has a registry equivalent requirement that you have to submit a financial plan to be reviewed, which I know just recently, they've started re-evaluating and saying, "You know, if every new CFP student today is already taking a capstone class where they had to produce a plan, maybe we can just have them submit their capstone requirements and not have to do a separate plan."

Ben: And that also reminds me of another thing the ICFP did I think that was important for their growth in creating substance behind the organization, and that was the residency program. That was our capstone program on our end.

Michael: The residency program was the ICFP's equivalent of the capstone program?

Ben: Well, I give it equal status, but I think it went well beyond that. It was more than just submitting a plan, it was actually working in a real-life situation with a client through three different stages of their life.

Michael: Well, and I know the residency program is still out there and popular and successful today. You know, I think FPA runs one or two of them a year. You know, we, actually through our XY Planning Network, just did an FPA residency program... or a residency program in partnership with FPA as well, all built around just going really deep and getting kind of that hands-on experiential training in how to do financial planning, which I know for a lot of advisors said, it is – not to knock the capstone class – but is way more enriching than the capstone class because you...I mean, you actually have to try doing a financial plan.

And I know one of the big things that they push even in the residency today is there's no computers, there's no technology. You have to explain and communicate your financial plan using big white pads and markers, not because it's meant to have an anti-technology bent per se, but that it really forces you to not use the software and the technology as a crutch, and really figure out how do you actually communicate this effectively to clients?

Ben: So all that is from the ICFP perspective. My view of the IAFP, their real strength lay in their chapter organization. They had a very strong chapter organization, and they put on some, you know, very effective national meetings. Their practice management meeting that I always thought was a very good one.

Michael: And so whatever happened to the registry? Did it just get folded into what is now the various online "find an advisor" portals?

Ben: No, I just think it was put to bed. I don't know.

Michael: Yeah, eventually it moved on. All right. Yeah, I know it's not literally out there anymore because there's nothing called the registry. I just realized. I don't know what happened.

Ben: They transferred it to the IBCFP. That's what they did.

Michael: Okay. So it's now the "find a CFP professional" portal. So I guess that was the ultimate win for CFP Board and the IBCFP is they literally brought their marks up to the point that the registry got folded into the CFP Board.

Ben: Right.

How the Common Industry Debates and Issues We Have Today are Not New [1:00:35]

Michael: So as you look broadly, I'm really struck by how many parallels there are of the issues you talk about that were debated at the time that still live out as debates today, whether it's, you know, who should call it out as a financial advisor? Should we be CFP-centric or multiple designations? Does the list of new CFP certificants get shared with the associations? You know, all of those overlaps. I'm curious about even some of the other common debates that are out there today and how you saw them playing out at the time. So has the fees versus commissions debate been as consistently similar throughout the years as well or is that more of a fees and commissions and the fiduciary debate more of a modern phenomenon and wasn't really a big thing for the ICFP versus IAFP days?

Ben: Oh, it was a big thing, fees versus commissions. And, you know, I was commission-compensated almost solely up until 1987, and then fee and commission. And then I think it was '91 or '92, I went fee-only.

Michael: So what led you to that progression of commission-based up to '87 then fee and commission for a couple of years, and then fee-only from 1991 onwards? What was that evolution for you?

Ben: It was the limited partnership debacle that was the trigger because, you know, I kept asking myself, "How was it that I made all these poor decisions?" And I realized it was my source of information was the problem, and that my source of information was dictated by my form of compensation. Yeah.

Michael: Because in essence, you were getting paid for limited partnerships, you were working with I guess a broker-dealer or equivalent that distributed limited partnerships because that's how you got paid. And so not surprisingly, the company that made all the money to be the intermediary for you to sell limited partnerships was incredibly upbeat about their potential when they told you these were good products to use with your clients.

Ben: Right, yeah. You know, there was...securities law were or was such that you had to get your training through...your broker-dealer was responsible for your training and your continuing education. And my other source of information was primarily the IAFP, and that was advertising-driven, as it turns out, you know, and exhibitor-driven. I remember at the annual conference in San Francisco, International Diamond had a three-story suite with a circular staircase between the three stories. And they had seven different chefs from each continent serving food. But anyway, it was rather bizarre.

Michael: Because this is what the...this is the kind of sponsorship money you have available to spend when you're using a really high-priced limited partnership that is not actually leaving much money for the clients? Never mind the luxurious commissions, they just spend it on exhibitor booth luxuries.

Ben: So anyway, I decided to untether myself from commissions so that I could...you know, I could have broadened my education before, but there was demands on my time because of my sources of compensation to get education from the approved providers. So anyway, I cut the tether and...I went fee-only really in 1987, but I continued to receive commissions and credited them against the fees. And I woke up to the fact that credits were going on faster than the fees were accumulating. So in 1991, I told all my clients that if they would give up their credits, I'd lower their fees. And I went fee-only.

Michael: It's an interesting point, though, that still today, you know, I feel like the...well, the internet gives us all these additional sources of information that weren't necessarily available for you at the time, although obviously, we have our own issues these days with making sure you get good news on the internet, but at least you can find some credible sources if you look.

But still, to me, there's an issue that frequently plays out. And to me the case in point, you know, I guess history rarely repeats but it usually rhymes, your discussion of, "I did all these limited partnerships because my company said they did the due diligence and vetted them and told me they were good, and then I realized that was because they were getting paid on the deal, so they kind of had an incentive to do so," reminds me a lot of what I still watch play out with advisors, at least a couple of broker-dealers, with the non-traded REIT deals just a couple years ago, which had a similar phenomenon of, you know, "My broker-dealer supposedly vetted this and determined that it's a reasonable deal, and the advisors did it with their clients."

And then some of those non-traded REITs have turned out just fine, but a bunch of them did not. It turned out that illiquid and non-traded, while hypothetically from the investment perspective that means you can attach an illiquidity premium to it, in practice, it just meant you could do bad stuff and no one would know until the deal blew up, which eventually it did, not quite to the 100% losses that I know some limited partnerships had, but at least to the extent of really big losses for clients.

And I know some advisors that have gone through the same kind of soul-searching again I think that you did of, you know, discovering that when the companies they're working with are paid to distribute the products, they don't always give the most subjective advice about whether it's actually a good product for your clients or not. And they don't always have the best incentives to really screen and scrutinize them because, as is true in so many areas, you know, if you really want to screen and scrutinize, one of the easiest way to have a lower cost, better version product for your clients is to cut out the broker-dealer, which most broker-dealers don't want. So those don't tend to be the ones they choose.

Ben: Well, let me just interject here that, you know, the problem is not the form of compensation, it's the person getting the compensation.

Michael: What do you mean by that?

Ben: Well, I could have done a better job of freeing myself from those sources of information and expanded my horizons as far as sources of information is concerned. But, you know, when a real estate deal has a 70% write off and a 70% tax bracket, Uncle Sam paid for half of the investment, and clients found that a rather, you know, understandable recommendation. So, you know, to a certain extent, the market provided the spoonful of sugar that helped the medicine go down, and it made it a little bit easier to say, "Yes, what I'm hearing is true." So I could have done a better job. And I know fee-only people who have done some horrendous things in representing their clients.

Michael: But I am struck, your ultimate conclusion, though, wasn't just to push yourself to find more and different sources of information, your decision was to actually just unhinge from the commission mechanism and I guess the information and education channels that went along with it.

Ben: Yeah, but, you know, to a certain extent, if I'd stayed commission-compensated, initially I formed my own broker-dealer so I could set my own education standards, but then I worked on a fully introduced basis with another broker-dealer that was owned by financial planners. That was one thing I thought would help purify my source of information, but it didn't. But anyway, I could have done more than I did. Circumstances dictated much of what I did.

Why It’s Crucial That You’re the One to Deliver Important News to Your Clients – Even the Bad News [1:09:03]

Michael: So I've got to ask, what was it like going through that era of needing to take this news to your clients? I mean, I know there were a huge number of financial advisors whose businesses didn't survive this transition, a whole bunch who not only the business didn't survive, but, their clients sued them out of oblivion for, you know, having 50% to 100% losses on an investment. So you were still left standing and moving forward even though you were doing some of them. What was it that let you survive? Were you just a little bit less exposed than some others or you just found a way to pivot and move forward faster?

Ben: Oh, I don't know, it might be God's grace to a certain extent. But I remember an experience I had. First of all, I need to tell you, I was scared to death and frightened for the continuing existence of my business. But after a couple of weeks of beating myself up, I did start picking up the phone and going out to see clients. Most of them were not aware of what was happening to them.

Michael: Oh, so it wasn't even just you went out to a client and had to bear the brunt of the, "Oh my God, you lost a whole bunch of my money, how could you?" But you actually had to sit down and tell them, "I need to break some very bad news to you."

Ben: And then tell them about the tax consequences of having lost all their money.

Michael: Because there were some tax clawbacks that happened when they blew up as well? So, not only did you lose your assets, then you took a tax bite on the back end for having it unwind poorly.

Ben: Right. But I remember one client said, "Ben, we don't blame you. You did what you thought was best, and we believe that's true." Now, only one client told me that, but it was sufficient to put some starch in my collar. Remember October 1980? Oh, you don't remember it, but you've read about it, October 1987?

Michael: Yep.

Ben: That was...I put on my first 15 fee-only clients in July of 1987. And so there was 15 of them where their portfolios went down 30%, 40% there in a couple of days. And I kept waiting for the phone to ring, and it never rang, so I started calling them. And I learned they knew what had happened in this case but they were so scared that it was worse than it really was. They were afraid to call me to find out how bad it was.

So anyway, the lesson I learned from those two experiences was that you should be the bearer of bad news before anybody else lets them in on it. They should hear the bad news from you. They heard the good news from you when you put them into the product or the service or whatever it might be, they should be the first ones to hear the bad news from you. And it's just part of the integrity of your relationship, your service relationship. Never let anybody else tell your clients the bad news.

Michael: Well, and it's a striking thing, you know, at the least, you can break the bad news to them, and painful though it may be, as you said, it's part of the integrity of the service relationship. And at best, as you kind of highlighted with the crash of '87 scenario, you know, I think particularly in today's environments because it's hard to escape the news when it comes at you on every social media platform and in the connected world, it's entirely possible that they've already heard at least some piece of the news from somewhere else and they actually think it's worse than it is. And that while you are afraid to call and give them bad news, their expectations are already so out of whack that reality will actually be good news compared to the disaster they've already painted in their heads that is not actually that bad.

Ben: Right, right.

Michael: It's an interesting way of viewing it.

So, as you look sort of over this whole 45-year cycle of the growth of the CFP marks, you were part of the original class with a dozen or 2, how many were in the original group? Was it, like, 20-something?

Ben: Forty-two.

Michael: Forty-two. All right, so you were part of the original 42, now we have more than 80,000 in the U.S., and I think we're over $200,000 internationally now when you take all the different countries rolled up together. So, you know CFP marks have had this tremendous run, and even more so than others, right? The CLU predated the CFP marks by almost 50 years. I don't think it ever gained even at the peak what the CFP marks are now, and it struggled to keep traction in recent years. The ChFC started almost exactly the same time as the CFP certification but never gained the same kind of traction.

So just as someone that's kind of watched and been along for the journey, What do you think it is that made...I guess I have kind of two questions. What is it that made the CFP marks, you know, be the one that grew beyond the rest, and what is it that just made financial planning grow the way that it did? Was there some secret formula to it that just financial planning grew, it just worked?

Ben: Well, let me answer the last question first. I think that grew because there was a perceived need that already existed. You know, people don't want to live a disjointed life with respect to their financial lives, particularly, and they want some kind of point of integration. You know, we are the only advisors out there that are in a position to spend time with our clients, the only professionals. You know, doctors can't spend more than eight minutes with a patient nowadays. And this is one reason I don't like hourly fees. You know, CPAs and attorneys charge hourly fees, and clients know that, and so they're nervous about spending any length of time with them.

And I find it interesting. I've never had an estate planning attorney. My own estate planning attorney take the initiative to contact. And I've been told by them that they're precluded from doing that. So I'm always having to call him when I read about something that I think may impact me or things in my life happen and I have to call it to their attention. A CFP, a financial planner is doing his business will know when those things are happening because they're in regular contact with their clients. So we have a very unique, almost pastor-like relationship with our clients. And I think that's why it's grown so much. As far as the marks, I really don't know. I just go back to that story I told you about putting the CFP on my check. I don't know, there's just something about it that resonates with people.

Michael: Well, and it does...yeah, there is something very directly simple and straightforward of financial planning. Although it does make me wonder, I don't know, maybe it's the little H in ChFC, but, if certified financial planning is so straightforward, why is chartered financial consulting never seems to have the same connection.

Ben: "Chartered" is a British term. You know, they have chartered public accountants not certified public accountants, so it doesn't have the same ring of familiarity that certified does.

Michael: Yeah, that makes sense to me. Was there a discussion at the time about the words? Was there actually a debate of certified versus chartered and financial planner versus financial consultant? I know at the time there was a Society of Financial Counseling that was lingering around as well.

Ben: Well, that was a founding organization of the three that we know about, the Society.

Michael: So what was the Society of Financial Counseling then?

Ben: Well, that was Loren Dutton's umbrella organization that founded the college and the IAFP, and then the ICFP grew out of the IAFP.

Michael: Okay. So how did we get from financial counseling to financial planning?

Ben: Well, I don't know, I wasn't there during that birthing process, but I understand that there was...at one time, they were going to call it registered financial planner. And I've forgotten what torpedoed that, thankfully.

Michael: Yeah, thankfully. So you like "certified" much better than "registered?"

Ben: Yeah, "registered" would just be like registered representative, so.

Michael: Yeah. Yeah, it strikes me that, you know, almost 50 years, ago Loren created this, you know, umbrella organization, the Society for Financial Counseling, which then birthed all these various organizations. And now five decades later of everything on financial planning, we see this progression of technology that's increasingly commoditizing the products moving us more and more to the advice and the counseling side of the client relationship. You know, today we call it behavioral finance and behavior management, but essentially it's kind of behavioral counseling in a financial context, that it just...I don't know, again, it's another one of those, "what's old is new again", that so much of where I see financial planning going in the coming years is all about financial counseling echoing what Loren called the organization 50 years ago.

Ben: Well, that's true. You know, our job will never be taken over by financial engines because clients crave a trusted relationship. There is more uncertainty and fright surrounding making financial decisions than just about any other decisions that people make in their lifetime. And once they have a trusted relationship with somebody, it's not easily broken. So all these other tools are there just to support that. You know, I've said for a long time, you can outsource everything you do except the relationship with the client.

Michael: Yeah, you can outsource...

Ben: Everything you do.

Michael: ...I guess or delegate everything you do except the client relationship.

Ben: Yeah.

Michael: Well, you know, it's funny. And then you look at the research studies of how much time advisors actually spend with their clients, and it's usually no more than a quarter to a half of our time, because the rest is still managing the business and prepping for meetings and finding new clients and administrative tasks and all the other stuff that gobble up our time and limit the actual client-facing time.

Ben: So cut all that stuff out.

Michael: Yeah. Well, and to me that's that's why I'm excited about technology and call it, like, the robo tools in the aggregate. Like, it doesn't replace what we do as advisors, it replaces the tasks that we shouldn't be spending time doing anyways.

Ben: One of the problems with all the tools that we have is that we're spending way too much time on the delta, if you get what I mean. You know, we're bothering more and more about less and less. And we should just bother about the client relationship.

Michael: We're focusing more and more on what matters less and less because we get stuck in the products and the investments and the industry debates and all of that instead of just getting back to the relationship side of things?

Ben: Yeah. You know, that perennial debate that goes on is, "What is the safe distribution rate?"

Michael: Yep.

Ben: Well, anyway, I think we spend way too much time analyzing the minutiae of that. The safe distribution rate is one that you and your client can trust in. You know, they assume that a client never wants to have his retirement income cut. We spend a lifetime, he didn't get to where he was, not responding to the ups and downs of his financial life, right?

Michael: Hmm.

Ben: And I don't know why we can't have a variable retirement income. I've had one now for 18 years. I just take a percentage of the year-end value, and some years it's more and some years it's less, but it's sustainable. We spend an awful lot of time analyzing all these different things, where all we have to do is look at where we were at the end of each year and make sure we're sticking around.

Michael: So what do you think we need to do to keep advancing as a profession and moving the ball forward? Like, you know, you've seen how far we've come over your career and your time with financial planning, like, what comes next from your perspective?

What Every Financial Advisor Should Be Doing to Advance Their Careers [1:23:04]

Ben: Well, I think, for the most part, we need to continue doing what we've done all along, and that is, make sure the body of knowledge has integrity, and make sure that people all pursue the same body of knowledge. And I don't mean this in limited terms but in the whole spectrum of the body of knowledge. And that we concentrate on the relationship. Don't get caught up in the minutiae, concentrate on the relationship, concentrate on making sure you're renewing your body of knowledge all the time. Also, concentrate on the integrity of the profession. Make sure you're contributing to it, both in the way you conduct your business and your life and in the way you support the organizations that are ensuring the integrity of the profession.

Michael: Any other tips you'd give younger or newer advisors in particular who are coming in? And, you know, it's been a few years but I'm sure you remember, like, when you get started, it's just like drinking from the fire hose, trying to take in everything at once, sort of everything you've got to learn to serve clients, and particularly when you're going broader and figuring out how to do financial planning and cover all these different areas for clients.

Ben: Well, one thing that everybody has today I didn't have, and that is you have an entry point. You don't have to jump off the deep end and start your own business in order to be a financial planner. You have all kinds of different career paths. So I would give a young planner the admonition that he takes time or she takes time to grow in a relationship where they can be mentored and trained for a number of years before they would entertain going out on their own. And as you embody, you know, there's career paths that don't require that you be the lead planner, that, you know, you can be just as valuable being in support of the relationship as the person who maintains the relationship.

Michael: Yeah, it was a strange journey for me that I spent, well, after a brief failed dalliance as a life insurance agent out of the gate, like, I spent most of the first 10 years of my career trying to figure out how to not be in a position where I would ever have to be responsible for going out and getting clients. Like, servicing them was fine, presented a zillion financial plans to clients, but, you know, going out to get them was, at least for me, the blocking point. Now after...in the second 10 years, turns out I eventually learned how to do that and got okay at it and bring in some clients now. But, you know, if I had been stuck in that role throughout of, you know, get clients until you succeed, I would not have succeeded. I would have been gone. I'd probably be a computer programmer or something, which maybe would have turned out okay. But professional video gaming would have been nice.

Ben: Yeah. Well, anyway, I would encourage all new planners to grow within an existing firm and make sure they know what they want to be when they grow up before they actually go out and do it.

Michael: I like that, grow within an existing firm and know what you want to be when you grow up before you go out on your own.

So, you know, the piece I feel like I'd add to this as well, especially just given the context of the conversation, so there was a fantastic book published a couple of years ago by Denby Brandon and Oliver Welch literally called "The History of Financial Planning." And, you know, we'll put a copy of it in the show notes as well. So this is episode 82, so if you go to kitces.com/82 and scroll down to the resources area, we'll have a link out to the book. But, you know, for anybody who's hearing this and wants, like, even more detail of all of the various twists and turns of the profession, that book, "The History of Financial Planning" really is fantastic at just laying out all these different organizations and the twists and turns and the splits and separations and a lot of the interesting key people that were involved at various points along the way.

Because, you know, as I think we highlighted in even more depth in a lot of areas in the discussion here, it really is amazing how many of the industry debates and discussions we have today that we have been having for 20, 30, 40-plus years. And I don't do view that from the perspective of, "Geez, maybe if we fight about it for another 20 years we'll finally figure it out and get it right," but simply to understand that these industry debates and challenges that we have have some real history to them and some context to them, and, you know, in some cases, you may find it just gives a little bit more perspective on why we fight about certain things in the industry the way that we do, and maybe also inspires a couple of ideas about the path forward.

Ben: Let me put in a plug for the upcoming FPA conference, 1st of October in Chicago.

Michael: Absolutely.

Ben: Lew Walker and I are going to be on a panel with two next-gen representatives. I don't recall who they are. But anyway, we're going to be going over much of what we talked about today on that panel, too. And we did so at the retreat in Arizona here earlier this year.

Michael: Excellent. Well, we will put a link in the show notes for the FPA Annual Conference as well. It's first week of October, it's in Chicago. For anybody who's interested, Chicago is very nice, accessible location, easy to fly into from anywhere. If you haven't registered yet, head on over and register and come see the session, see Ben and everybody talk about this live in person.

So Ben, as we wrap up here, you know, there's a question I like to ask all of our guests. And this is a podcast about success and advisors that have had successful paths, and one of the things that I've always observed through this is that just the word success means different things to different people, sometimes it means different things to us in just varying stages of our lives. And so, you know, having built and sold your own business, you know, I know you retired a number of years ago and have just done this journey through financial planning for 40 odd years now, how do you define success for yourself?

Ben: Well, I define it by using a different word. I think it's fulfillment. Anything that gives me a sense of fulfillment is a success for me. You know, and that can be a momentary thing, it can be looking back over a career and getting a sense of fulfillment, which I do looking back over it. And fulfillment comes from a sense that you have contributed to the world around you and to the people around you, and have exercised your talents and gifts in a way that maximizes their potential.

Michael: I hope this becomes at least a fulfillment moment for you, maybe a fulfillment hour and a half, for you, discussion. I think it's going to have impact on a lot of people who are listening, both just understanding more of the history of financial planning and the past that we've gone, and just some really powerful insights I think that you shared along the way of what it really takes or what it really means to be an effective financial planner.

Ben: Well, thank you very much for letting me do this. That is fulfilling.

Michael: Absolutely. Thank you for joining us.

Ben: Okay.