Executive Summary
In mid-August, the CFP Board issued some proposed changes to the CFP Board work experience requirement, including differentiating the work experience requirement for those personally deliver financial planning, from those who work in a supporting, supervisory, or teaching role. Up until now, all experience has been treated the same; but under the proposed rules, those who support, supervise, or teach will need more experience than those who personally deliver planning. Yet at the same time, the proposed changes make the differentiation by reducing the work experience requirement for those who personally deliver financial planning from three years, down to only two years. Is this strengthening the standard, or weakening it?
The inspiration for today's blog post is some recent conversations I had with two financial planners about the proposed changes to the CFP Board's work experience requirement. One planner was wildly in support of the change, thrilled to see the CFP Board "finally" acknowledge that there is a difference between those who support, supervise, or teach, from those who DO financial planning, and that those who are gaining real experience by doing are justly recognizing for the richness of their experience.
The other planner, however, suggested that the proposed change is simply a weakening of the standard, catering to those who just want to get their CFP marks as quickly as possible, without properly learning their craft. In his eyes, it's not that differentiating the doing of financial planning from its support, supervision, and teaching was bad; his issue is that the work experience requirement for those who personally deliver financial planning was reduced from 3 years to 2. In his viewpoint, the better course of action to strengthen the standard of the marks would have been to keep the experience requirement for those who personally deliver financial planning at 3 years, and simply raise it for those who support, supervise, or teach, to some higher level, such as 5 years.
This seems like a good professional debate to me. Many justly point out that 2 years (or even 3 years) isn't possibly long enough to really become an expert in your professional trade. On the other hand, the point of the CFP marks isn't to designate the definitive expert; it's to clarify the point of minimum competency (albeit at the level of at least some real expertise). Looking at other professions, we see a similar trend. Doctors must go through residency, which gives them the minimum expertise to perform their craft, but it is not the end point of the expertise road. Doctors may study even further to gain additional expertise depth in a particular field, and most doctors I know would still acknowledge that they had a lot to learn about handling patients better and executing their jobs even better in the years that followed residency.
Notably, this is not the only change that the CFP Board proposed to the experience requirement, either. Their summary points out that they are also shortening the qualifying window for experience (work must be completed within 5 years before or after successfully completing the CFP exam, instead of within 10 years before or 5 years after the exam), and a new restriction that teaching in a CFP Board Registered Program can only earn a candidate a maximum of 2 years out of the 3 years of required experience; the remaining year must be earned by supporting, supervising, or personally delivering financial planning. Furthermore, teaching in a finance-but-not-CFP-Board-Registered program will no longer count towards the experience requirement. The CFP Board also affirmed the value of practical courses of study. A one semester college practicum course is now eligible for one month of CFP work experience, and one week intensive Residency programs are still eligible for three months of CFP work experience (although notable, the CFP Board now indicates that any "qualified residency" program is eligible, opening the door for another non-profit or for-profit organization to offer residency programs to compete with the existing and beleaguered FPA Residency program). Overall, expect a trend towards more practicum and residency program offerings, as there will likely be a significant increase in student demand for such programs now that they will contribute to the CFP work experience requirements.
Personally, I have to admit I'm a little torn about these changes. The acknowledgement of the value of practicum and residency programs seems a plus to me, along with tightening the qualifying window. And while I would wholeheartedly agree that the work experience requirement should distinguish between those who personally deliver financial planning, from those who support, supervise, or teach, I'm inclined to agree with my friend who suggests that a better course of action would have been to keep the experience requirement at 3 years for those who personally deliver, and increase it slightly (perhaps to 4 years?) for those in other roles. I don't know if I could justify pushing it to 5 years though; that's quite a long time, and as much as I know some people would like to see the experience requirement even higher (especially for non-direct-delivery roles), I can appreciate that at some point, we need to acknowledge that people have reached a minimum standard to conduct themselves as a professional (remember, this is about the minimum standard to practice, not the maximum standard required to be the best!).
So what do you think? Is this a good change, or a bad one? If the CFP Board strengthening the standard, or weakening it? Is it appropriate to differentiate between those who personally deliver financial planning, from those who support, supervise, or teach it?
Remember that in addition to posting feedback here, you can also comment directly to the CFP Board about the changes by emailing [email protected] by September 17th.
And exactly why does the CFP board count financial service experience BEFORE the person gets their training (i.e., before they have earned their CFP). No other profession I know does this.
If you say it costs $400 to $500 dollars, the client only heard the $400 dollars. If you say my education is 2 to 3 years, the client only hears 2 years.
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