Why CFP Professionals Can’t Just Say They’re A CFP

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Buckingham Strategic Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Read all of Michael’s articles here.

(Michael’s Note: The video below was recorded using Periscope, and announced via Twitter. If you want to participate in the next #OfficeHours live, please download the Periscope app on your mobile device, and follow @MichaelKitces on Twitter, so you get the announcement when the broadcast is starting, at/around 1PM EST every Tuesday! You can also submit your question in advance through our Contact page!)

#OfficeHours with @MichaelKitces Video Transcript

Welcome, everyone! Welcome to Office Hours with Michael Kitces.

For today's Office Hours, I want to take a few minutes to talk about one of the most common complaints I hear from the now more than 80,000 of us who are financial planning professionals with our CFP certification. And the complaint usually goes something like this. It's a letter or an email I might receive that says:

"Dear Michael, I just received a letter from the CFP Board saying that I need to update my website so it doesn't state that I'm a CFP. Instead, I have to be a CFP certificant or a CFP professional. But CPAs don't have to be CPA professionals. They can just call themselves CPA, so why does the CFP Board waste its time and resources bothering us about something so petty and not just treat us as actual professionals the way that CPAs are treated?"

This is a great question. Again, one that I hear pretty often both because it's just really annoying to feel like the CFP Board is coming after you for something so benign as writing "CFP" instead of "CFP®," little R for the registered trademark or not writing CFP professional, which frankly sounds kind of cumbersome, instead of having them try to aggressively enforce against real problems like CFP professionals that don't meet their fiduciary duty to their clients or just give bad financial planning advice... And you don't see any state boards of accountancy sending letters to CPAs saying, "Hey, you should call yourself a CPA professional, not just a CPA." Or, "You didn't put a trademark symbol after CPA."

So why does the CFP Board bother us about this?

The CFP Marks Are A Trademark, Not A License [Time - 1:45]

The reality is that there's actually a really good reason why the CFP Board requires us to put that little R symbol after the CFP marks or requires us to say CFP professional or CFP certificant and not just CFP. And the reason simply is this: The CFP marks are not a license like a CPA is, the CFP marks are a trademark.

So technically, the way it works is this. The CFP Board long ago got a trademark of the CFP marks along with the label CERTIFIED FINANCIAL PLANNER. So the reason we get to call ourselves CFP professionals or CFP certificants at all is that we signed an agreement with the CFP Board, where the CFP Board grants us the right to use their trademarks in exchange for paying them a fee, and then meeting certain requirements that they specify, most significantly the "Four E's" requirement of education, exam, experience, and ethics obligations. So we sign an agreement that says we'll honor the CFP Board's Terms and Conditions and pay them their fee for the right to use the trademark, and then we're allowed to use their trademark and put CFP® on our business card.

Now, this is distinct from how a license works, like a CPA. Accountants get to call themselves CPAs because the state actually grants them a license to operate as a certified public accountant or CPA, and then the state typically delegates the responsibility for certifying and overseeing all those CPA licensees to a state board of accountancy. But it functions as a license.

And here's why the distinction matters so much. Because the CFP Board is not a state-sanctioned regulatory entity, it's just some organization that owns a trademark and lets other people use it, and it has to abide by trademark laws. And in order to be honored to respect it as a trademark, you have to follow those U.S. trademark laws, which have some very specific requirements about the proper use of a trademark. The first is that a trademark has to be used in a manner that clearly distinguishes it from the rest of the text around it. For instance, making it all capital letters or bold or underlined or putting that little registered trademark "R" symbol at the end. That's why you write CFP® in all capital letters. That's why the CFP Board ask that any time you write certified financial planner, you write all caps, CERTIFIED FINANCIAL PLANNER.

The second requirement is that a trademark is never supposed to be used as a noun, only as an adjective. So it's sort of a funky grammar thing but it has a reason. And this is why you always see the CFP Board telling us to say CFP professional or CFP certificants. Because just saying CFP is not actually the proper legal use of the trademark. It turns it into a potentially generic term, which means the CFP Board can lose the trademark by allowing it to become generic.

Now, I realize that sometimes we as consumers do kind of turn trademarks into nouns instead of their adjective form, but the proper use of a trademark by the company itself is to use it as an adjective. That's why you'll notice Budweiser doesn't actually say it makes Budweiser. It makes Budweiser beer. Budweiser is the adjective, beer is the noun. And while we often just call them Oreos, it's actually an Oreo biscuit or an Oreo cookie or an Oreo thin. And if you look, you'll notice that the company itself only uses Oreo as an adjective to describe a type of biscuit or cookie or thin, not as a noun. Because the whole point of trademark law is you can't own the thing, the noun, the object. That's actually a patent, not a trademark. So you don't trademark an Oreo, you trademark an Oreo-style cookie. You don't own the trademark on beer, you own the trademark on Budweiser-style beer.

And so a trademark should only be used as a descriptor of a noun, not as the noun, which is why we are not CFPs. We can't be. The CFP Board doesn't own the right and doesn't have an authority to make us CFPs. They own a trademark and have the right to grant us the right to use that trademark to make ourselves CFP professionals, where the CFP is a type of professional, but they don't actually license the professional.

Trademarks Must Be Defended To Be Respected [Time - 5:52]

Now all this being said about the proper use of the CFP marks, as, you know, I mentioned earlier, consumers often do end up using a trademark as a noun even when they're not supposed to, which raises the question of why the CFP Board bothers with this fight at all. And the short answer is they kind of have to or they actually risk losing control of the trademark in the future. Because a key aspect of trademark law is that if you want the courts to respect your trademark, you have to at least treat it like a proper trademark. If you don't and people start using it improperly and then later down the road you decide you don't like how they're using it (for instance, someone tries to copy and steal your trademark and start using in a way that you don't like), the courts may say, "Well, why should we take steps to defend your trademark now when you didn't do anything to defend yourselves along the way? You've abandoned your trademark. You can't go and reclaim it after the fact."

In other words, if an organization wants to own a trademark but doesn't take at least some responsibility for ensuring it's used properly, the courts may consider them as having abandoned the trademark and are reluctant to take action against those who use it improperly later. They just say, "Ugh, you clearly weren't serious about your trademark. You abandoned it. You haven't defended it in years, so we're not going to let you defend it now after the fact." Or alternatively, courts may say, "You've allowed your trademark to be used so widely as a noun, it's become generic to the point that we're just not going to recognize it as a distinct trademark anymore. It's in common use." Because if you actually look up, once upon a time, zipper was a trademark, so was escalator, now they're just generic words.

So in the context of consumers, again, you can't really control how people use your trademark. And the trademark laws don't literally require every human being on the planet to always use your trademark the right way or you're in trouble. So it's not like Budweiser is going to start suing consumers for calling it a Bud instead of Budweiser beer and Nabisco doesn't sue people for calling them Oreos. However, in part, because there's no business relationship between Budweiser or Nabisco and the consumer in the first place, the courts recognize you can only do so much here, as long as you use the trademark properly. And you'll notice that companies really do refer to it as Budweiser beer and Oreo cookies. If other people misuse it, there's not much you can do.

But when it comes to the CFP marks and us as CFP certificants, it's a little different because we are in a direct business relationship with the CFP Board. We pay them for the right to use their trademark and they grant us the right to use it subject to their terms and conditions for proper use. So if we pay the CFP Board to use their trademark and then we don't use it properly and then they take no action to stop improperly use, they risk being deemed as having abandoned the proper use of the trademarks, and then they can lose control of the trademark altogether. And then literally anyone could just use the term CFP or certified financial planner in the same way we throw around terms like financial advisor, financial consultant, or the generic form of, "I'm a planner. I'm a financial planner."

So simply put, if anyone ever really tries to steal the CFP marks away from the CFP Board and just copy them, start using it without paying them, just kind of take off with the marks... the CFP Board's entire defense is going to rest on (well not entire but much of the defense) on being able to demonstrate that they were honoring the trademark in the first place, using it properly, and took reasonable steps to defend their trademark, including not only themselves but the people they license it to, which is us. That's why the CFP Board take steps to make sure we're properly using the marks by saying CFP professional or CFP certificant, and that registered trademark symbol. They have to take some reasonable steps to ensure we're using their trademark properly or they risk losing control. But it doesn't mean one CFP who doesn't do this properly can invalidate the whole thing, again, but it does mean the CFP Board has to in some way shape or form demonstrate that they're taking reasonable efforts to defend their trademark.

So if you care about seeing the CFP marks respected by courts and you want to be certain the only people who could say they're CFPs actually go through the education, exam, experience and ethics requirements that most of us did, then you want the CFP Board taking reasonable steps to ensure that we're not actually saying we're CFPs, we're saying we're CFP professionals, and acknowledging that we're using their registered trademark.

“Regulating” A Profession By Trademark Law Vs Licensing [Time - 10:11]

Now, I'll grant that this situation is not exactly ideal. Ideally, you would need a license to become a CFP, a real license which would be a controlled title like CPA. There would be a state or a federal regulator that ensures only people who say they're CFPs are actually CFPs, meet the requirements for CFPs, and can face actual sanctions and losing their license for failing to abide by the rules of their CFP license. That's basically how it works for CPAs. If you don't abide by the rules for CPAs, you lose your CPA license, and then you can't practice as a CPA anymore. But that's not the reality for financial planning today. Instead, the only regulatory licenses we have is the very low bar of becoming an insurance agent or a registered rep of a broker-dealer or a registered invetment adviser, which are actually just licenses for selling insurance, selling investments, or managing a portfolio. None of those are licenses to actually be a financial planner or do financial planning.

So for those of us who want to differentiate from the rest, we voluntarily choose to meet the CFP Board's education, exam, experience, and ethics requirements in exchange for the right to use their CFP trademark on our business cards and websites, because we essentially pay them to use their trademark as a way to distinguish ourselves. And then they get to decide where to set the line on the standards you have to meet in order to be allowed to use their CFP trademark. And if you don't meet their requirements, they'll revoke your right to use the trademark and you can't say you're CFP professional anymore. They can't discipline you... they can't fine you... they can't bar you from the industry... because they're not a regulator. But they grant the trademark, and they can take it away.

But the fundamental point, in the end, is that because the CFP Board is not a state or federally-sanctioned regulator of CFPs or anyone else, we can't say we're CFPs because it's not a license. CFP Board is simply a non-profit entity that aims to serve the public interest by fostering professional standards and personal financial planning through setting and enforcement of education, exam, experience, and ethics and other requirements for CFP certification. So in the end, they're just a non-profit that offers a popular trademark that people can use and is trying to make that trademark desirable enough and important enough that we're all willing to step up to their higher standards in order to use that trademark, which ultimately lifts the entire standard for financial planners in the aggregate.

And when you think about it that way, it's actually amazing how far we've come that we now have over 80,000 CFP professionals, almost 30% of all financial advisors, who have stepped up to the higher standard of CFP Board beyond the licensing requirements because this little three-letter trademark has such perceived value in the marketplace. We put ourselves through all those hoops just to add their trademark on our business card and our website. And the whole reason why the CFP Board is a non-profit and not a membership association is because it doesn't exist primarily to serve CFPs as members, it exists for the primary purpose of protecting the marks on behalf of the public. And it's that public-facing mission that makes it a non-profit, and then they ask us to step up to their standards in order to use this trademark that they've created.

But the bottom line is that the reason we can't just call ourselves as CFPs and we have to say we're CFP professionals is because the CFP is not a license, it's a trademark owned by the CFP Board, which grants us the right to use those marks as long as we meet their standards.

But in order to ensure that the trademark of the CFP is respected in courts, the courts expect the CFP Board to take at least reasonable steps to defend their trademark, ensure it's not abandoned, ensure it does not become a generic term, and especially by those who pay to use the trademark, which means us, over whom the CFP Board has a bona fide business relationship where it could be exerting authority, and so the courts expect it to do so. Which is why we occasionally get those letters from the CFP Board about fixing the way we're using their CFP trademark. It's not that it always has to be done perfectly, but they actually are expected to be able to demonstrate that they tried. Which means if you really value the CFP marks, you want the CFP Board taking the necessary steps to protect them, even if it's a little bit annoying when it comes at you directly.

I hope that's helpful as some food for thought about why you have to say you're a CFP professional or a CFP certificant and why we cannot just say CFP the way an accountant can simply be a CPA.

This is Office Hours with Michael Kitces, normally 1 p.m. East Coast time. Sorry, I was tied up at a client meeting today so we're recording now a little bit later instead. Thanks for joining us, everyone, and have a great day.

So what do you think? Is it important for advisors to properly use the terms CFP professional and CFP certificant? Would it be better if the CFP were a state-issued license like the CPA? Do advisors generally understand the importance of the CFP Board defending the proper use of their trademark?