Executive Summary
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. Yesterday, I had the opportunity to speak with several staff members at the CFP Board, and wanted to share the information that I received.
My conversation yesterday was with CFP Board CEO Kevin Keller, Managing Director of Marketing and Business Development Tom Crowder, and Director of Public Relations Dan Drummond. During our discussion, we walked through the concerns that I raised on this blog earlier in the week in response to the CFP Board's latest Public Awareness Campaign Fact Sheet. Below, I provide you the highlights from the conversation. (Editor's note: My apologies in advance that despite the fact that this is "just the highlights", it's still a pretty long post. But if you're really interested and concerned about this issue, I hope you'll bear with me and read all the way through.)
First and foremost, our conversation started out by emphasizing the point that the public awareness campaign - and the associated fee increase - is still in the proposed stage before the CFP Board's board of directors. It has not already been decided upon and passed. I will grant that it seems likely (although I suppose not guaranteed) that some form of public awareness campaign will be affirmed by the board of directors at their upcoming meeting; nonetheless, I continue to give credit to the CFP Board that, notwithstanding all the hubbub about the proposed increase, the planning community has been given the opportunity to discuss it and share feedback before it actually occurs.
As we dug into the first major issue on the table - is this expected to be a permanent fee increase, or not - it was explained that technically, the proposal that the board of directors is considered is an initial four-year public awareness campaign effort, with the right to rescind the campaign (and the associated fee increase) after two years. Thus, in essence, it would appear that if the board of directors does approve the proposal, it will extend for a minimum of two years (2011 and 2012); if the metrics for the campaign are wildly UNsuccessful, it may be rescinded after the first two years. Otherwise, it will continue for four years, and at that time the board of directors will again evaluate the effectiveness of the campaign, and decide from there whether to continue it further.
It was emphasized (and I would agree) that a public awareness campaign takes time. Merely attempting a 1-year process is likely insufficient to genuinely gauge effectiveness and impact or whether the branding is delivering any value. Nonetheless, the CFP Board appears to have a very strong focus on being able to assign metrics for evaluating results. In fact, Kevin Keller emphasized that one of the reasons Arnold Worldwide was chosen in particular as the advertising agency that would support the campaign if it moves forward is because they have a strong reputation for tying metrics and results back to the work that they do, so that success can be properly evaluated.
All that being said, though, the focus of the conversation on this point was clear - IF the public awareness campaign is successful according to the metrics that are set forth by the board of directors, expect the public awareness campaign to be renewed at the four-year point and become a staple of the CFP Board's value proposition. Obviously - hopefully? - the extension would only occur if measurable results dictate that the initiative is being successful, when theoretically we would all want it to continue. But the bottom line is that if the campaign doesn't deliver results, it can be cancelled after two years or simply not renewed beyond the initial four year term; if it is successful, expect it to continue thereafter.
At this point, our conversation directed towards a few of the other questions that I had raised - regarding the fee increase as a special assessment versus a general increase in fees, and the possibility of tiering the increase amongst certificants of different ages/experience levels/business sizes and/or making a portion of it optional. On this point, the response was pretty clear - the fee increase will be uniform, across the board, and apply to everyone. Although some early considerations were apparently made for other models, the reality seems to be - at least from the CFP Board's perspective - that other forms of this are not very feasible to implement and administer. As for making the fee increase optional or otherwise partially voluntary, the CFP Board responded (paraphrased) that it would rather find an appropriate fee increase that is tenable to all certificants who will hopefully derive value from the public awareness campaign, rather than make it an optional/voluntary/pay-as-you-go process; the goal is to benefit the most certificants in the most effective manner possible. I have to admit that it seems like a pretty reasonable position to me.
On the other hand, it's notable that the focus of this question in particular was not just about the distribution of the cost amongst certificants - which the CFP Board clearly wants to do evenly and uniformly - but also to express the concern that once a fee increase occurs, it often seems difficult in practice for organizations to later reduce those fees and they just become "repurposed" for something else if their original need goes away. On this point in particular, the CFP Board emphasized that the resolution being considered DIRECTLY ties the precise $145 per certificant per year dues increase to the public awareness campaign - by "earmarking" the fee increase directly to the new initiative, the intention is to emphasize not only that the fee increase is truly intended to be directed towards the campaign and nothing else, but that if the campaign ends, so does the additional fee. I will grant that if the fee increase goes through, and we all spend a few years getting accustomed to paying $325/year, and the public awareness campaign really does end and our fee is ready to revert back to $180/year, there is a reasonable "risk" that the CFP Board may decide to propose some new fee increase at that time for some other purpose, since they will "know" at that point that the certificant community is able to maintain a higher level of fees. Nonetheless, the proposal on the table right now seems pretty clear - ALL of the fee increase is to be directed to the public awareness campaign, period, and that's the only purpose for which the funds are intended to be used, and therefore if the public awareness campaign ends, so does that portion of the fee. For better or for worse, I don't think there's a lot more that we can do on this particular point than take them at their word.
The next issue explored in the conversation was about the cost of the campaign and the amount of the fee increase. Is a $145 fee increase - or about $9 million when multiplied across more than 60,000 CFP certificants - the "right" amount for the campaign? How did the CFP Board arrive at this number in particular? On this issue, the CFP Board staff pointed out that certainly, when it comes to something like a public awareness campaign, there is no magic number of dollars that works. Could the campaign turned out to have been targeted at $8 million or $10 million or some other number instead of $9 million? Yes. Instead of trying to tie the campaign to a
specific number, instead the CFP Board pointed out the process that it engaged in order to arrive at the amount in the first place; and in point of fact, I think it's pretty notable overall to take a look at the approach that the CFP Board has used to guide it up to this point.
Pre-Step 1. Leading up to the initiation of their exploration of a public awareness campaign, the CFP Board noted that the primary reason they began to go down this road, at all, was actually in response to ongoing feedback they continued to receive from CFP certificants over the years that the public just doesn't really understand what the CFP marks are all about. In other words, the initial impetus for considering a public awareness campaign was feedback from existing certificant holders.
Step 1. To explore the true extent of interest in a possible public awareness campaign, CFP Board issued an online survey to 7,000 CFP certificants regarding the issue. 94% of certificants responded that they supported the idea of the CFP Board improving public awareness of the marks (albeit without yet any discussion of associated cost).
Step 2. Given certificant interest in a potential public awareness campaign, the CFP Board hired a third-party outside research organization (Westat) to conduct a statistically significant telephone survey to further determine specifically whether and to what extent CFP certificants would support a public awareness campaign via increased fees. In response to the telephone survey, 83% of CFP certificants indicated they would continue to support the campaign, even if it involved increased fees.
Step 3. As a part of analyzing questions posed and answers received during the telephone survey, Westat's pricing analysis of the results indicated that 72% of CFP certificants would be willing to support a $12 per month fee increase in order to fund a national public awareness campaign. (Survey respondents were given an opportunity to indicate various fee levels that they would be willing to commit towards a public awareness campaign; the $12/month threshold was, as noted above, supported by a large majority of respondents.) The pricing analysis also showed that a majority of CFP certificants would prefer to have certification fees assessed annually, rather than bi-annually.
Step 4. Given a survey response supporting a $12/month increase per certificant that would lead to approximately $9 million per year in revenue (when applied to all certificants) to commit towards a public awareness campaign, CFP Board began to work with Arnold Worldwide to evaluate the feasibility of having an effective impact with a public awareness campaign given a $9 million per year funding source (in addition to a willingness of the board of directors to commit up to approximately $6 million from its own reserves to help start the campaign).
Step 5. CFP Board and Arnold Worldwide conducted focus groups with consumers and gathered additional quantitative and qualitative data to better understand consumer views on financial planning, the financial services industry, and the CFP marks. The results revealed that there was generally little understand of financial planning as differentiated from the financial services industry in general, and little awareness of the CFP marks. However, the focus group and other research results also revealed that once consumers have an understanding of the experience, education, and exam requirements of the CFP marks, they hold a significantly more positive view of CFP certificants relative to the rest of the financial services industry. In other words, the research showed that awareness of the CFP marks actually has an impact on the subsequent decisions of consumers when considering a financial advisor.
Step 6. The results of the study group and follow-up analysis indicated that the funding would not be sufficient to impact all Americans nationwide, but that a slightly more targeted campaign could be effective. Ultimately, it was determined that an effective target group would be a segment of the population called "mass affluent initiators" who generally have between $100,000 and $1 million in assets, a mindset that makes them likely to seek out professional advice, and can effectively be a type of "center of influence" to expand their positive views of the CFP marks and financial planning beyond themselves. This group is estimated to be approximately 9% of the US population.
Step 7. Given overwhelming CFP certificant desire for and willingness to support a public awareness campaign, a pricing analysis to determine the extent of a fee increase that would be agreeable, leading to an identified funding source for a campaign, for which subsequent study groups and feasibility studies were conducted to determine whether an impact could be made, whether the impact would have value, and the scope of target audience that could reasonably be reached given the funds, the CFP Board issued notice of a proposal of a fee increase for the CFP certificant community to respond to - which is what we have subsequently been debating here and elsewhere for the past several weeks.
To say the least, the process seems to me to be a remarkably reasonable and appropriate measured approach to the issue of whether the CFP Board should initiate a public awareness campaign. The organization took a reasonable incremental series of steps to continue evaluating the proposition, given favorable results at each step of the process that initiated the next step. In turn, though, this means that it was not actually a goal to identify a $9 million public awareness campaign; instead, the reality is that the CFP Board let the $9 million amount arise as a result of the pricing analysis conducted by Westat with a statistically significant telephone survey of CFP certificants, and then subsequently sought to determine whether and how such funds could feasibly be used to have a positive impact.
Of course, all of this still doesn't entirely address the final question - why now? Is this difficult economic environment for financial planners really the right time to ask them to commit to a new public awareness campaign and the associated cost? As the CFP Board pointed out, there's arguably never really a "right" time for a significant increase; we can always come up with a reason why now isn't the time. As the proverb goes, "The best time to plant a tree is 25 years ago; the second best time to plant a tree is now." Given that the CFP Board hasn't planted this particular tree for the past 25 years that it has existed, it would seem the time is now; the longer you wait, the more time you spend not having the tree growing and developing. And as the CFP Board points out, many in the CFP certificant community have been asking for this! I know, as I posted in my initial blog post on this subject, that my gut response to the proposed public awareness campaign was "it's about time!" that the CFP Board took up the public awareness mantle itself, rather than relying on the FPA and NAPFA to carry the weight of promoting the importance of the marks and what they stand for. And while it is a difficult environment for financial planners (because of the overall economy), it's also a difficult time for the American public, and arguably an especially good time for the message about the value of the CFP marks to get out. On the other hand, the CFP
Board also emphasized that this is not about influencing public policy or any near term regulation; in point of fact, if the public awareness campaign is approved, it will likely not even begin until the second quarter of 2011, which would already be after the SEC is scheduled to deliver the results of its analysis about potential gaps in regulation in the delivery of financial services.
I think for me the bottom line is that I see an active process that the CFP Board has engaged in, to attempt to gauge the interests and willingness of CFP certificants to support a public awareness campaign, determine an appropriate cost to it, evaluate whether those funds can be applied in a feasible and meaningful way, and then invite the community - before the change - to further comment and provide feedback. To me, it seems that the CFP Board is trying to engage in as open and transparent a process as it can - notwithstanding the ongoing allegations that it is engaging in Machiavellian tactics towards some hidden purpose - with a strong commitment to delivering demonstrable value for the fee increase with a commitment to rescind or not renew the initiative if it doesn't show real results. I don't know that we can ask for much more than that of any organization, unless we're just going to accuse them of outright lying and fraud, for which I see no direct evidence whatsoever.
If the CFP Board's research of its certificants is right, then - notwithstanding a reasonable unhappiness from some who just won't tolerate the fee increase - the fee increase should pass, the public awareness campaign will be initiated, and we'll all see whether the results turn out as hoped. If the CFP Board is wrong and its survey results were not actually representative and have misjudged the certificant community... well, then I suspect we'll see that impact, too, in declining 2011 renewal rates for certification. But either way, though, I have to admit that I think the CFP Board has tried to do its homework to get this one right. We'll see what happens from here!
If you've still got some concerns about the fee increase, or questions about the public awareness campaign, you can reach the CFP Board directly at [email protected] before the upcoming board meeting begins next Wednesday, November 10th. If the resolution for the public awareness campaign is passed (in current form, or with modifications), except to hear about it sometime during the subsequent week of November 15th-20th.
Michael, nice work.
Michael,
To play the devil’s advocate, does this mean that if the campaign is not successful and/or shows meaningful improvement in awareness, CFP designees should drop their membership? After all, if our intended audience doesn’t perceive the value of working with a CFP designee after all these years of existence, why pay the annual dues? After all, I believe that people work with a JD, CFA, or a CPA because of the perceived credibility of those designations.
Keep up the good work!
Tobin (CFP…ChFC, CASL, soon-to-be AIF)
Michael,
All your diligence is appreciated in this matter. I find a common thread in the derogatory remarks on the financial planning board, that the CFP board can do NO RIGHT. I don’t honestly think that the CFP board, where they all are volunteers, conspire against everyone or have this vast ulterior motive. Maybe they honestly want to improve the recognition of the marks and validate them to those that spent a lot of time and study to get them. After all, we all know the end game among all holders is to have the credential be as valuable (both legally and practically) as a JD to an Attorney, a CPA to an Accountant, etc. Maybe the public awareness is another step along that path?