Executive Summary
As debate - and some confusion - continues regarding the CFP Board's proposed fee increase, the organization has made a new fact sheet available to help address many of the questions and concerns that have been raised. However, it seems that a few of the pressing questions from the planning community are not entirely answered.
The CFP Board's fact sheet appears in practice to be a condensed summary of the details discussed in the longer virtual CFP Certificant Connections video that was posted on the CFP Board website a few weeks ago (and admittedly, the 3 page fact sheet is a great summary of the key points of the 1-hour video regarding this issue in particular). However, the fact sheet does not seem to address a few of the ongoing questions and criticisms that have been emerging from various forums, including two particularly active threads from Financial Planning magazine's website that can be viewed here and here.
As discussed previously in this blog, I am generally a supporter of the proposed fee increase, and believe there is value in promoting the CFP marks (even if we can't always directly identify the results). And while some have criticized the CFP Board's action to be somewhat "self-centered" as an organization - in that it is promoting its own marks as a path for the financial planning profession - I don't think that's necessarily a failure of the organization, either.
All that being said, I do think there have been some valid questions put forth from the community regarding the proposed fee increase, that at least deserve attention from the CFP Board's board of directors when they meet later this month regarding this topic. Most of these questions do not, I think, need to be answered now by the CFP Board, but I hope that the board of directors considers them seriously in making their final decision (and in communicating the reasons to support that decision, if they do in fact choose to move forward). So without further ado, my 5 questions/concerns...
1. Is this intended to be a permanent increase if successful? The fact sheet states "The Board will be evaluating any campaign on an ongoing basis, and if it is found not to achieve the desired results, has expressed willingness to end the campaign and the associated fees." So at the least, it is implied that if the public awareness campaign is not having impact, the fee increase would end. But does that mean it's a permanent increase, as long as the campaign does have an impact? Does that mean a permanent public awareness campaign will become an ongoing endeavor from the CFP Board - with the new higher fee level to substantiate it on an ongoing basis - if this initial foray is successful?
2. If the initial fee increase is intended to be temporary, can we call it something else? As many critics have pointed out, once most organizations raise fees, they turn out to stay raised, even if the needs of the organization change. Accordingly, some has reasonably expressed concern that if this is processed as an outright fee increase, that it may be difficult for the fee to really be reduced in the future, even if the campaign doesn't reach its proposed benchmarks for success. So if the goal is really to test the waters of a public awareness campaign, can't this be put forth as some type of "special assessment", rather than a change to the base rate of ongoing renewal fees? If the campaign is successful, and the CFP Board truly wants to make an ongoing public awareness campaign an anchor of its value proposition as an organization, the board of directors could revisit a permanent fee increase at that point, when it is more clealry justified with actual results. (Although I'd point out that technically, I'm not certain it's possible to really apply a special assessment fee for a licensing organization like the CFP Board; after all, we are not talking about a membership fee where special assessments are perhaps more common.)
3. Do we have to spend THAT much? On the one hand, many have criticized the CFP Board's efforts for being too anemic; "isn't $9 million of advertising just going to be an ineffectual drop in the bucket as an attempt to change the public awareness of several hundred million Americans?" On the other hand, many have also criticized the CFP Board for the magnitude of the fee increase; "I'm all for the CFP Board trying to expand public awareness, but I'm not supporting an 80% fee increase!" But it does beg the question - given the size and footprint of the CFP Board as an organization, its membership base, and the available dollars, is the amount of resources being allocated to the campaign really the right size/amount? I realize that the CFP Board's own process did ask people what they thought was a reasonable payment to make for what the CFP Board sought to provide, but perhaps the amount of pushback on the organization suggests it is still too much at once? Or alternatively, is there a way to amortize the cost over the CFP certificant base over a longer period of time (e.g., a small increase that occurs for a longer period of time, rather than the "full" increase all at once?)?
4. Why NOW? Perhaps the most substantive question that I continue to see expressed in the CFP certificant community is "why now?" In what is still a difficult economic environment where many planners are struggling, is this really the right time to ask for a significant new financial commitment from certificants? Admittedly, the difficulty in the economic environment also means - at least in theory - that more Americans than ever are seeking financial guidance, and that it may be an especially ripe time for the CFP Board to put out its message. Nonetheless, it is clearly still a difficult time for advisors as well, and begs the question of whether this might be the right campaign, but the wrong time to ask the certificants to help finance it.
5. Do we ALL have to bear the FULL cost? Several discussion threads criticizing the proposed fee increase have variously put forth the concept that perhaps there's a way to re-distribute the cost of the public awareness campaign amongst those who can better afford it and/or who are more interested in supporting it (of course, it's also worth noting that the CFP Board is already funding a portion of the initial campaign with its own accumulated funds!). This could take the form of a smaller fee increase (e.g., only $72 per year, or half the amount) for everyone, and a "check-the-box" option for those who want to contribute an extra amount to support the CFP Board (who knows, given the CFP Board's 501(c)(3) st
atus, perhaps there's even a way to make an extra contribution into a charitable deduction?). Or alternatively, perhaps the fee increase could be tiered; a lower level for "new" CFP certificants (e.g., in their first X years) or "younger" CFP certificants (e.g., under the age of Y), who may still be in the very early phases of their business and career where any extra cost is especially prohibitive, with a higher price tag on more experienced practitioners with more stable businesses who might better be able to afford it?
Notably, my list of questions does not include what I would call the more "tactical" questions of the proposed fee increase. For instance, although I'd probably be interested to look if they chose to share the information, I'm not really asking for details about exactly what metrics the board of directors plans to use to evaluate the program; nor am I interested in knowing the minutiae about how the advertising campaign will be implemented. That is their responsibility to determine and implement, to be an effective board and good stewards of the organization. But the strategic issues about the magnitude of the fee increase, its timing, its distribution amongst certificants, and the purposes for the funds, are issues that I hope the board of directors seriously considers.
So what do you think? Have the details of the fact sheet made you feel better or worse about the CFP Board's proposal? Are there any other important questions or issues outstanding that you still feel haven't been addressed?
Earlier in the week, this blog posed a number of questions to the CFP Board in response to the Fact Sheet that the organization had issued, seeking to address a number of issues the planning community has raised that still appeared to be unanswered. Yeste