After years of wavering, the Financial Planning Association has recently re-focused itself back to specifically supporting financial planners who pursue the CFP certification and advocating for the CFP to be recognized as the one true designation, recalling back the famous "One Profession, One Designation" refrain first uttered by financial planning luminary P. Kemp Fain nearly 25 years ago. Yet the reality is that while the CFP certification has advanced significantly since Fain's first comments in 1987, so too have many "competing" designations, some of which represent very high quality advanced educational content, albeit often in narrow and focused specialties under the financial planning umbrella. Nonetheless, many "bogus" designations have also proliferated over the years, contributing significantly to consumer confusion. As a result, while there is still virtue to having the CFP certification as a minimum baseline designation to cut out the other bogus designations, there needs to be room for the advanced specializations that have begun to emerge as well. Which means perhaps it's time for the FPA to extend Fain's famous speech one step further, from "One Profession, One Designation" to "One Profession, One [Minimum] Designation" - where the CFP certification serves as a minimum baseline for anyone who wishes to become a financial planner, but beyond which a growing number of "post-CFP" educational programs can flourish to support the emerging fields of financial planner specialization.Read More...
Five years ago, Kevin Keller became the CEO of the CFP Board, and at a unique and challenging time for the organization. The CFP Board had just announced its decision to relocate to Washington DC, which was likely to turn over most of the staff (at least, those who were left, as prior CEO Sarah Teslik had just slashed the headcount of the organization by nearly 40% in the preceding few years). Beyond staffing issues, the organization seemed to be in turmoil, with one leadership blunder after another, and Keller himself was entering as the 7th permanent or interim CEO to fill the role with the CFP Board in as many years.
Given that Keller was essentially an "outsider" at the time - experienced in leadership at another organization, but with no particular background or connection to the financial planning world - it was not clear how would he (re-)shape the CFP Board as he took over, with the rare opportunity, and danger, of re-staffing the entire organization from the ground up. Would it be the fresh start the CFP Board needed, or would the outsider unfamiliar with the challenges of the industry and the organization blunder?
Looking back over the past 5 years of the CFP Board, the conclusion seems clear now - although the CFP Board's central role in the financial planning profession continues to make its decisions controversial from time to time, the reality is that the organization under Keller's leadership appears to be entirely reinvented, and in a very positive direction. Although there are definitely some challenges that remain, this isn't your father's CFP Board anymore.
It was August 24th. I had just awakened early in the morning in Sydney, my final day there after serving as a keynote speaker for the Australia Portfolio Construction Forum, and I was looking through my morning email – which was actually the prior afternoon’s August 23rd email at home in Washington DC, given the 14-hour time zone difference. Earlier in the week, I had caught the surprise announcement from the FPA that CEO Marv Tuttle was stepping down, to be succeeded by then-current FPA COO and Associate Executive Director Lauren Schadle, and read with interest Schadle’s comments that FPA would be stepping up its focus on those financial planners who are serious enough about their craft to seek out the CFP certification.
What caught my eye that morning, however, was an unexpected response to Schadle’s comments from American College President and CEO Dr. Larry Barton. The College, through which I have proudly earned 6 professional designations, including the CFP itself, is one into which I had invested a lot of time, money, and effort, both during my studies, and in the years thereafter as I have continued to promote its advanced educational programs and even recently taken part in providing content for their latest RICP designation.
Yet after reading Barton’s response, I felt for the first time a true embarrassment in being an alumni of the American College of Financial Services, and shame in being a holder of what was once its defining credential, the CLU designation.
As regulatory reform for financial services moves along slowly here in the US, half way around the world in Australia a new set of regulatory reforms entitled the "Future of Financial Advice" are now being implemented. The changes will include a ban on all investment commissions, and a fiduciary duty for those giving financial advice, not unlike similar reforms scheduled in the UK under their Retail Distribution Review (RDR) set to take effect in 2013. Notably, though, while Australian reforms may have leapfrogged past the US, the Australian marketplace looks more like the US did nearly 20 years ago, as approximately 80% of advisors work under a small number of dealer groups and there are almost no independent firms. With Australian firms required to adopt fee-only models, including AUM, retainer, and hourly, within a year, the evolution of business models in the US may provide a glimpse to what is coming for Australia. Yet while the US offers Australia a glimpse of fee-only business models, Australia may provide US a first glimpse at how financial services shifts in a fiduciary, fee-only environment - providing a live, real world environment to evaluate questions like whether the less affluent marketplace really is served effectively without commissions, and whether there's still a place for broker-dealers in a fiduciary world.Read More...
With the first major changes to the continuing education requirements for CFP professionals in nearly two decades, the CFP Board has proposed that in the future up to 10% of the CE requirement could be satisfied with content on practice management. Distinct from education on trust and communication, the proposal would allow for CFP CE for practice management topics tied to the business of operating a financial planning practice.
While many have long requested CE credit for practice management content, though, it seems that allowing practice management CE strays away from the fundamental purpose of continuing education, and risks creating a double-standard for technical competence between financial planners that work in a practice, and financial planners who own a practice.
Perhaps that means the better solution is to improve the practice management tools, resources, and content that are available in the first place, so that practice management can simply be its own reward, and justify its own ROI, for those who choose to own and operate a financial planning business?Read More...
For the first time in almost 20 years, the CFP Board has proposed a broad range of changes to the CE requirements that apply to all CFP certificants. The new rules would include an increase in the total number of CE credits required from 30 hours every 2 years up to 40 hours, an increase in the required Ethics education from 2 hours to 4 hours (but half of those hours can be earned from general ethics content, not only "ethics" content on the CFP Board's own Standards of Professional Conduct), and the opportunity to earn up to 4 hours of CE credit from pro bono services and/or practice management content. The changes under consideration address virtually every area for which the CFP Board has been criticized in recent years, although some areas - notably, CE credit for practice management - will be debated more actively than others. At this point, the proposed changes are only a proposal - and open for comment - but unless significant objections arise, it seems likely that these new requirements could be in place as soon as next year!
In the financial planning world, it's not uncommon to "fire" clients that are especially difficult to work with, not merely because the clients are unprofitable, but simply because they are so unpleasant for you and your staff even if they ARE profitable. In fact, many practice management consultants would suggest it's a best practice to systematically fire some of your most unpleasant clients, as it helps to create a more positive workplace for you and/or your employees. Yet the reality is that often clients who are difficult to work with are also those in greatest need - and in virtually all other helping professions, it's a requirement of the profession to help everyone in need, not just those who are the most pleasant to work with. Of course, the reality is that right now, there aren't enough financial planners to serve everyone out there, but nonetheless it raises the question: is firing the most difficult clients in a financial planning practice a best practice, or a sign of an immature profession?
Most of us have read articles and weighty analyses about "The Problem" with current advisor regulation--which is, simply stated, that RIA offices are not currently examined nearly often enough for the protection and security of the general public. I think the current figure is that some advisors have to wait 11 years before an SEC examiner pays them a visit, and some of the analyses have suggested that every four years would be a more palatable schedule. What you never hear, in any of the discussions about advisor regulation, is a more basic question: why, exactly, do we need these examinations at all?
Choosing a financial advisor is difficult, and as a result it's helpful to provide the public with guidance about how to select one. Unfortunately, though, in recent years recommendations to the public from many organizations have increasingly focused on whether the advisor is a fiduciary, without any acknowledgement of whether the advisor has the training, education, and experience to provide effective financial advice. Consequently, the public increasingly runs the risk of being poorly served by a well-intentioned advisor whose advice is totally incompetent. Ultimately, protecting the public will require setting forth a standard that meets fiduciary and competency requirements. And as it standards right now, the clearest choice for a professional minimum standard appears to be the CFP certification. While the CFP marks - as with any standard - don't unequivocally mean someone will get the best and most optimal advice because the advisor has the CFP, that's not the point; in the end, the purpose of such a standard is not to define a best practice, but instead the minimum acceptable standard to ensure the fundamental protection of the public.Read More...
As the world moves inexorably forward into the digital age, technology increasingly takes on a role in both augmenting and competing against traditional businesses. The world of financial services is no exception; in recent years, technology has taken leaps and bounds to augment and enhance what financial planners do, but now a new breed of technology firms threatens to challenge advisors as well. The rise of the so-called "robo advisor" - online startup firms that aiming to replace traditional advisors, as TurboTax did to tax preparers - has begun.
But so far, it's unclear whether the current breed of robo advisors will really make a dent in what real advisors do; in fact, the scope of most robo advisors is so narrowly focused on delivering passive, strategic, low-cost index portfolios, that arguably their greatest competition is not from comprehensive financial planners but instead from do-it-yourselfer alternatives like Vanguard and Charles Schwab!
The real test for the robo advisors, though, is the one they have not yet faced - will clients really be willing to stay the course through turbulent markets and change their behavior for the better because a computer told them to do so?Read More...
