Weekend Reading For Financial Planners (March 25-26)

CFP Board's New "It’s Gotta Be A CFP" Ad Campaign Reflects Flexibility After Split

(Patrick Donachie | Wealth Management)

Previously a single 501(c)(3) nonprofit, CFP Board announced in January that it was bifurcating into 2 organizations: CFP Board of Standards (which will be a 501(c)(6) nonprofit) and CFP Board Center for Financial Planning (which will continue to the carry the 501(c)(3) status of the current CFP Board), both of which will have the same board of directors and chief executive. According to the announcement, the CFP Board’s intention in becoming a 501(c)(6) nonprofit (a status traditionally used for membership organizations) was to be able to be more explicit in marketing the benefits of becoming a financial planner (e.g., salary ranges and workplace flexibility, which the CFP Board can highlight to recruit more future CFP professionals), and to be able to more proactively communicate about the value the public receives from working with a CFP professional (e.g., doing even more to direct consumers to find a planner on CFP Board’s "Let’s Make A Plan" website).

With its newly expanded capabilities, CFP Board this week launched a new ad campaign, dubbed "It’s Gotta Be A CFP", which explicitly encourages viewers to hire a CFP professional, something the organization could not do in previous ad campaigns (which told viewers they could "learn more" about the CFP marks by visiting the "Let’s Make A Plan" website). Overall, CFP Board said the campaign (which includes television and streaming ads, as well as search engine marketing and social media advertising) "will highlight high-risk situations and the feeling of uncertainty and then contrast those scenarios with the confidence and security one feels when working with a qualified professional". For instance, the debut ad contrasts the feelings of a nervous bungee jumper who is unable to get an answer about his frayed cord with a prospective client in the office of a CFP professional who is able to get answers to his questions. The campaign comes at a cost of $12 million, according to CFP Board, bringing its total advertising investment during the past decade to approximately $150 million.

Altogether, the new ad campaign represents the first main effort of CFP Board to use its expanded marketing powers to not just promote the value of the CFP marks to the public (which previous ad campaigns have succeeded in doing), but also to actively encourage consumers to seek out a CFP professional for financial advice. In addition, as a 503(c)(6), the next step for future CFP Board ad campaigns could be explicitly discussing the benefits of CFP certification to encourage potential advisors to pursue the CFP marks (e.g., CFP board has tested an ad promoting the average 6-figure salary for CFP professionals), perhaps paired with research to determine whether a potential influx of new advisors will find financial planning to be a sustainable career!

Top Democratic Senators Urge Crackdown On Popular HNW Estate Planning Trusts

(Mark Schoeff | InvestmentNews)

Passed in 2017, the Tax Cuts And Jobs Act doubled the unified estate and gift tax exemption amounts to $11.2 million (or $22.4 million for married couples with portability), which has since risen to $12.92 million per person for 2023, reducing the number of estates with a Federal estate tax burden (though this measure is set to sunset after 2025 unless Congress acts to adjust or extend them). Still, many High Net Worth (HNW) individuals and families find themselves with a significant potential estate tax burden, given a marginal estate tax rate of 40% on assets beyond the exemption amount , and have used a variety of tactics to reduce the amount of tax owed, many of which involve the use of advanced estate planning trust strategies (e.g., Grantor-Retained Annuity Trusts [GRATs] or Intentionally Defective Grantor Trusts[IDGTs]).

At the same time, some legislators have become concerned that these tactics not only (legally) allow HNW individuals and families to reduce their estate tax burden, but also may perpetuate wealth inequality by circumventing the estate tax system to pass significant assets down to the next generation. Accordingly, this week 3 Democratic U.S. Senators (Elizabeth Warren, Chris Van Hollen, and Sheldon Whitehouse), as well as Senator Bernie Sanders (who is independent but caucuses with the Democrats), wrote a letter to Treasury Secretary Janet Yellen asking her to curb a variety of estate planning strategies designed to reduce an individual’s estate tax burden.

One of the primary targets of the senators are GRATs, which are typically designed in a way to transfer high-growth assets out of an individual’s estate without estate or gift tax consequences. The Senators asked Treasury to exercise its regulatory authority to require a GRAT’s remainder interest to be a set minimum percentage of contributed assets (e.g., 25%), which would make GRATs less appealing as a tax avoidance tool (as the remainder interest would be subject to gift or estate taxes, effectively eliminating the zeroed-out GRAT approach). Other regulatory actions requested by the senators include clarifying that IDGTs are not entitled to stepped-up basis, and reissuing regulations regarding Family Limited Partnerships (FLPs) that would reduce the valuation discount used to reduce or avoid transfer taxes.

In the absence of legislation (e.g., while President Biden included restrictions on GRATs in his recent budget proposal, such a measure would appear unlikely to make it through the Republican-controlled House), the 4 senators appear to be seeking regulatory action directly from the Treasury to enact their desired policies, though it remains unclear how receptive Treasury will be to these requests (and whether any potential regulations would survive legal scrutiny). At the same time, the request serves as a reminder to financial advisors that the value of popular estate planning techniques can change over time, whether due to new regulatory or legislative actions (which can create or eliminate different strategies), the sunsetting of current provisions (which could expand the number of clients subject to estate taxes), or even changes in interest rates (which can affect the value of different estate planning strategies), and that certain strategies available today might not be around (or be effective) in the future!

U.S. Lawmakers To Examine Merits Of Higher FDIC Bank Deposit Insurance Cap

(Reuters)

The Federal Deposit Insurance Corporation (FDIC) was established in 1933 in the midst of the Great Depression as part of an effort to restore trust in the American banking system. For the next 70 years, this insurance contributed to the minimal number of bank runs (when a bank does not have sufficient cash on hand to meet a large number of simultaneous withdrawal requests from depositors), which made the FDIC somewhat of an afterthought for many depositors. However, the importance of deposit insurance came back to the forefront in 2007 and 2008, when a series of bank runs occurred amid the subprime loan crisis. The crisis led the FDIC to temporarily increase the amount of deposit insurance from $100,000 to $250,000, a change that was later made permanent.

And now, recent bank failures have brought these deposit insurance limits to the forefront. For instance, many depositors (often businesses) at Silicon Valley Bank had account balances well over $250,000, leaving them potentially exposed to losses above this amount. This has led to concerns among depositors at other banks, particularly smaller and regional banks that might not be as well capitalized as larger banks, that their deposits over $250,000 might not be safe, leading some to move their balances to larger banks (potentially threatening the business of these smaller banks).

Given the nervous state of depositors (particularly businesses that hold deposit balances greater than $250,000 to cover payroll and other expenses), several prominent lawmakers have said they would consider whether a higher federal insurance limit on bank deposits was needed to stem the flow of deposits away from smaller and regional banks. Notably, these concerns appear to be bipartisan as Democratic Senators Elizabeth Warren and Chris Van Hollen, as well as Republican Senator Mike Rounds and Representative Patrick McHenry (chairman of the House Financial Services Committee) have expressed openness to exploring the adequacy of current FDIC limits.

Ultimately, the key point is that while a potential increase to FDIC insurance limits is being debated, advisors have several options to support their clients, particularly those with large deposit balances. For instance, clients could consider using a combination of individual and joint accounts, or perhaps open accounts at more than 1 bank to remain below FDIC limits. More broadly, the recent banking crisis could also serve as an opportunity for advisors to discuss cash management strategies with clients to ensure that the client’s cash allocation meets their liquidity needs and broader portfolio goals!

Roth Vs Traditional Account Contributions And After-Tax Wealth Uncertainty

(David Hulse | Journal Of Financial Planning)

One of the most common questions for retirement savers is whether to make traditional or Roth-style contributions to their retirement accounts. In practice, households must make a decision whether to contribute to a pre-tax traditional IRA or a tax-free Roth, based on whether the upfront tax deduction (on the traditional IRA contribution) will be more or less valuable than tax-free growth at the end (on the Roth IRA distribution).

Mathematically, the Roth-versus-traditional IRA decision will actually be the same, regardless of growth rates and time horizon, as long as both accounts remain intact and tax rates don’t change. If future tax rates do change, though, the Roth IRA will result in more wealth when tax rates rise in the future, while the traditional IRA will benefit when tax rates are lower in the future. Though in the end, the reality is that those who choose a Roth-style account effectively 'lock in' their current tax rate; the uncertainty in After-Tax Accumulation (ATA) is almost entirely driven by the traditional IRA, which either finishes ahead (if future tax rates are lower) or behind (if future tax rates are higher and take a larger bite in the end).

However, Hulse suggests there can be cases where a Roth account will have a more uncertain return. For instance, the variance of a contribution’s ATA is lower for a traditional account than for a Roth account if the tax rate is expected to increase by more than a small amount. This is because the balance of the accumulation in the traditional account is ‘shared’ by both the account owner and the government (which will receive more or fewer taxes depending on the growth of the account), so while the final ATA of a Roth contribution is expected to be more than a traditional contribution in this case, the variance in the potential final ATA is higher for the Roth contribution than the traditional contribution (because the Roth doesn’t share a portion of the gains with the government in the form of taxes).

Altogether, Hulse’s analysis suggests that while advisors can help clients maximize their ATA by choosing traditional contributions when the tax rate upon withdrawal is expected to be lower than their current marginal rate and Roth contributions when the future rate is expected to be higher, doing so can increase the variance of their eventual after-tax balances as retirees cede the ‘benefit’ of sharing their losses (alongside their gains) with the government. Though still, when tax rates move in the 'favorable' direction, this variance ends up simplify amplifying how much more the client will benefit from making the Roth, rather than traditional, contribution, which means the direction of tax rates remains the driver in the Roth vs traditional choice!

More Realistic Retirement Income Projections Require Dynamic Adjustments

(David Blanchett | Enterprising Investor)

One of the most common questions that clients nearing or in retirement ask of their advisors is how much they can afford to spend each year without depleting their assets during the remainder of their lifetime. And thanks to financial planning software and related tools such as Monte Carlo simulations, advisors can help clients better understand whether they are on a sustainable spending path. At the same time, many of these tools assume that clients will have relatively fixed spending (perhaps adjusted for inflation) throughout retirement (particularly if the plan is being made on a one-time basis, rather than making adjustments over time). This can lead to conservative outputs for sustainable spending, as a Monte Carlo analysis will treat a simulation that falls $1 short of the client’s target spending as a failure (and assumes that the client would not be willing to reduce their spending).

But survey research suggests that individuals are more flexible with their spending than financial planning software programs might assume. As an alternative to static spending rules (or certain dynamic spending rules that can be difficult to implement), Blanchett suggests that advisors could consider using the ‘funded ratio’ metric (often used to measure the health of pension plans) to support retirement income planning. The funded ratio is the total value of the client’s assets, which includes both current balances and future expected income, divided by the liability, or all current and future expected spending. A funded ratio of 1.0 would mean the client has just enough assets to fully fund their goal, a ratio greater than 1.0 would represent a surplus (and could potentially spend more), and a ratio less than 1.0 would signal that they have a shortfall (and might need to cut spending).

An advisor could use the funded ratio for a given year (perhaps estimated using a Monte Carlo simulation) to determine potential changes in spending on a client’s ‘needs’ and ‘wants’. For instance, if the client’s funded ratio were 1.75, the advisor might suggest increasing spending on 'wants' by 8% but only increasing spending on ‘needs’ by 2% (under the assumption that potential future downward adjustments to ‘wants’ spending will be easier for the client to take than reductions in spending on 'needs'). On the other hand, if a client’s funded ratio were 0.5, the advisor might suggest reducing spending on ‘needs’ by 3% and lowering spending on ‘wants’ by 10% (again given the assumption that clients will have more flexibility in reducing their spending on ‘wants’ than on ‘needs’).

Ultimately, the key point is that integrating dynamic rules into a retirement income plan can have significant implications on optimal retirement income decisions. And because it takes a comprehensive look at a client’s assets (incorporating both current portfolio balances and future expected income) and allows for spending flexibility in retirement (though the funded ratio’s sensitivity to assumptions can make it tricky to work with in practice), using the funded ratio to determine adjustments in retirement income could help advisors maximize their clients’ spending in retirement compared to more static approaches!

A Comparison Of Variable Spending Strategies

(Wade Pfau | Advisor Perspectives)

In 1994, financial planner William Bengen published his seminal research study on safe withdrawal rates. The paper established that, based on historical market data, a person who withdrew 4% of their portfolio’s value during their first year of retirement, then withdrew the same dollar amount adjusted for inflation in each subsequent year, would never run out of money by the end of a 30-year time horizon – even in the worst case sequence of returns ever experienced in the historical US data. From this insight, the so-called '4% Rule' was born, and while it has been subject to numerous challenges and critiques over the years (with some calling it 'too safe' and others claiming it is not safe enough), 4% remains anchored as at least a productive starting point for countless retirement planning conversations (before narrowing-in on more client-specific recommendations).

Since the introduction of the '4% rule', with its fixed real spending, researchers and practitioners have proposed a variety of variable spending rules to improve upon it. Pfau considers several of these and assesses (using a slate of assumptions) how they compare (in terms of the initial spending rate, changes in spending, final legacy value, among other factors) compared to a ‘baseline’ of fixed inflation-adjusted spending.

For instance, Bengen suggested implementing ‘floor-and-ceiling’ withdrawals as an alternative to the more static 4% rule. Using this strategy, a retiree selects a fixed percentage of their portfolio to spend each year but does not allow spending to rise above or fall below certain percentage above or below the inflation-adjusted value of the initial withdrawal amount. This strategy allows spending to increase (when portfolio performance is strong) while providing additional protection against sequence-of-return risk compared to fixed inflation-adjusted spending (although this requires the retiree to reduce their spending when their portfolio balance falls, though this reduction is capped at the floor level).

Another option is to use a 'ratcheting rule', 1 version of which would apply an inflation-adjusted dollar floor at the initial spending rate and no ceiling, allowing for constant inflation-adjusted spending when the real value of the portfolio is less than its initial value, but fixed-percentage spending when the real value of the portfolio has increased. While this strategy supports an initial withdrawal rate slightly less than the ‘baseline’ scenario, spending is preserved in inflation-adjusted-terms at the median and 10th percentile of performance (and increases by more than 100% at the 90th percentile).

Pfau explores several other strategies as well, including Guyton-Klinger guardrails (which can allow for a higher initial withdrawal rate than the ‘baseline’ scenario while mitigating against sequence risk), an ‘inflation rule’ (where upward inflation adjustments are only made to an initial withdrawal amount if the current portfolio balances is greater than the initial balance, allowing for a higher initial withdrawal rate and greater legacy amount compared to the ‘baseline’), and actuarial rules (similar to the IRS’s RMD rules, which result in a portfolio that will not be depleted, at a cost of lower initial withdrawal rates).

In the end, there are a wide range of withdrawal rate strategies advisors can use with their clients, which vary on several levels, from the initial withdrawal rate proposed to the ease of implementation for the advisor. And while variable spending strategies tend to reduce sequence risk in retirement and allow for greater initial spending rates, it is important for clients using them to recognize that they might have to accept potential reductions in their retirement income in certain years (and for advisors to communicate this possibility)!

5 Pages Every Advisor Website Must Have

(Susan Theder | Financial Advisor)

Financial advisory firm websites can serve a variety of purposes, from introducing a visitor to the advisor(s) and their team to demonstrating the firm’s unique value proposition and explaining its fees. And while firms might have a range of features on their site, getting 5 of the ‘basic’ pages right can make the site more effective in attracting prospects and encouraging them to engage further with the firm.

The home page gives site visitors a first impression of the firm and can be used to guide the visitor to take action. Theder suggests that within 5 seconds (and without scrolling or clicking), a visitor should be able to know who the firm serves, the problems the firm solves, and what they can do to take the 'next step' (i.e., a "call-to-action"). Doing so can ensure that the site resonates with the firm’s ideal client and gives them a clear way to get in touch with the firm.

Once visitors decide the firm might be a good fit for them, they might then navigate to the firm’s ‘About Us’ page. Rather than providing a generic resume on this page, advisors can consider crafting a story, written in the first person, explaining how they got into the business and why they love their work. In addition, this page can talk about the rest of the team, including what makes them qualified, what they do differently, what they do for fun, and who they are as people.

Next, advisors can frame their ‘Services’ page in terms of the challenges their target clients are facing, and how the firm can solve them (rather than just a laundry list of the services the firm provides) to stand out from other websites. In addition, including information on how the firm charges for planning can promote transparency and filter out potentially unqualified clients.

Firms can also include a blog on their website, which gives them the opportunity to share unique content and demonstrate their expertise. The key is to be consistent and focus on topics (that might not necessarily be related to finances) of interest to the target audience (and to consider ways to repurpose this content for social media and other channels!). Finally, the firm’s ‘Frequently Asked Questions’ (FAQ) provides firms the opportunity to answer the most common questions a potential client might have (and can help boost search engine optimization by using keywords that align with the firm’s services).

Ultimately, the key point is that by designing a website that demonstrates how the firm can meet the needs of its target clients in a clear way and gives them (potentially multiple) ways to keep the relationship going, firms can potentially attract and convert more qualified prospects!

4 Tools To Improve Your Advisor Website's Search Visibility

(Crystal Butler | Advisor Perspectives)

Advisory firms often spend significant time and money creating their website. But this effort can go for naught if prospects cannot find the website in the first place. This is why taking steps to improve the site’s search visibility can make this investment pay off and attract more visitors.

The first step to improving visibility is to create a site map, which is a hierarchical listing of all the pages on the website. This gives search engines a full listing of all of the site’s pages to index them and include them in search results. Some website platforms (e.g., Squarespace or Wix) create sitemaps and submit them to search engines automatically, while those using WordPress can use a plugin like Yoast SEO to generate a sitemap and Google Search Console to submit it.

Next, firms can add Google Analytics 4 (GA4) to their website. This free tool collects data about traffic to the website and helps the firm analyze it in ways that can improve marketing (e.g., by seeing which marketing channels are most effective at driving traffic to the site). Firms can also set up Google Search Console, a free tool that helps analyze search engine performance. For instance, it can identify errors like broken links and missing pages that can downgrade the site’s search rankings.

Finally, firms that serve a local community can take steps to improve their local Search Engine Optimization (SEO). For instance, adding keywords for the firm’s city (or even specific neighborhoods) in title tags, body copy, and headings (preferably in a natural, conversational way) can help search engines understand the relevance of the website to searches for individuals from certain areas searching for an advisor.

In the end, creating an effective website that demonstrates a firm’s unique value proposition is just the first step in generating new client leads. By helping search engines understand the firm’s ideal clients, firms can enlist an important (and unpaid!) partner in the marketing process!

RIA SEO: Keyword Strategies For Financial Planners

(Sam McCue | XY Planning Network)

Financial advisors typically start their own firms in order to provide advice to individuals, not because they are marketing experts. But because advisors need to attract clients in order to serve them, marketing is an important part of running a business. And with consumers frequently searching for a financial advisor online, Search Engine Optimization (SEO) is one of the best ways for advisors to attract prospects.

SEO is the process of making the written words, images, videos, and structure of a website easy for search engines to crawl and understand. And keywords are one of the most important signals search engines use to determine what subject a website is authoritative on and how authoritative it is. This means that selecting optimal keywords can help move your website up the rankings when the ‘right’ consumer performs a search.

Luckily, advisors do not have to work alone in deciding on the best keywords. A range of tools, both free (e.g., Google Ads Keyword Planner, MOZ SEO, and Keyword Surfer) and paid (e.g., Ahrefs and SEMRush) are available to help advisors zero in on the best keywords for their firm. When choosing keywords, 2 of the best metrics to track are volume (the average number of searches per month for a given phrase) and keyword difficulty (the difficulty the firm will have ranking highly against other sites optimizing for this search phrase). In general, keywords that have high volume and low keyword difficulty will be most effective. For instance, "fee-only financial planner" is likely to have high volume, but also high keyword difficulty (given the many fee-only financial planners out there!), while "fee-only financial planner Boston" could be a more effective keyword choice given the lower keyword difficulty.

Once keywords are selected, the next step is to actually incorporate them into the firm’s website and see how well they are performing. The strongest keywords will optimally go in the website’s title and meta-description (the 140-character description of the page). Keywords can also be included in header tags and can be sprinkled throughout paragraph text on the website (perhaps using approximately 1-2 keywords per 100 words of copy). Advisors can then use Google Analytics to see how organic traffic to the website changes over time.

Ultimately, the key point is that SEO can be one of the most cost-effective ways to attract prospects to a firm’s website. By selecting relevant and tailored keywords and placing them in strategic locations around the site, firms can increase the chances that they will be near the top of the rankings when their target clients are searching for a financial planning firm!

CFA Institute Makes "Biggest Single Package Of Changes" In Its History

(Alicia McElhaney | Institutional Investor)

The Chartered Financial Analyst (CFA) designation mark is one of the most well-respected, and difficult to attain, in investment management. The 3 exams candidates must pass to become a charterholder have relatively low pass rates (36% for Level I, 44% for Level II, and 48% for Level III during the November, 2022 administration) and require approximately 300 hours of study to prepare for each one. But while the 3-exam structure will remain in place, the CFA Institute this week announced (following 2 years of research and consideration) 6 major changes to its credentialing program.

In response to employer concerns that new charterholders did not necessarily have the practical knowledge necessary to be effective in jobs, the CFA Institute will introduce practical skills modules (on subjects such as financial modeling, analyst skills, and Python programming for investment managers) to all 3 levels of the CFA program. In addition, starting in 2025, at Level III candidates will be able to chose 1 of 3 job-role focused pathways (portfolio management [the traditional version of Level III], private wealth, or private markets).

Recognizing the work that candidates undertake to pass each of the exams, the CFA Institute will also introduce digital badges that allow candidates demonstrate that they have completed Levels I and/or II during their search for internships or full-time positions. The remaining changes include reducing the volume of study materials at each Level (while keeping the hours of preparation the same), offering additional practice materials, and extending Level I Exam eligibility by 1 year to those who are 2 years away from completing their undergraduate degree.

Overall, the changes appear to be aimed at improving the certification experience for employers (as those who achieve the CFA designation will come with more practical job-related skills) and candidates (who will be able to access additional study resources and can be recognized for their progress toward achieving the certification), ostensibly in the hopes of increasing demand for (and candidates who pursue) their CFA marks. At the same time, some have noted that the changes do not necessarily improve the client experience, raising the question of whether the CFA Institute (whose mission is to "lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society") is more focused on growing its candidates and charterholders (and appealing to the financial firms that may hire them), rather than the broader public, or if in the end the CFA marks are still more than substantive enough to be a net gain for consumers by widen its reach and relevance?

Accountants Have To Go To College For 5 Years. Some Are Rethinking That.

(Lindsay Ellis | The Wall Street Journal)

Aspiring Certified Public Accountants (CPAs) must complete certain education, examination, and work experience requirements to gain their license, which is issued by an individual state. With regard to the education requirement, most states in the 1990s increased the number of credit hours from 120 (the number of credits for a traditional 4-year degree) to 150, typically requiring candidates to spend a fifth year taking undergraduate courses or starting a graduate program. But amid a current shortage of CPAs (and the financial burden of both paying for an extra year of education and potentially foregoing a year of earning a salary in the workplace), legislators in some states are questioning whether the ‘extra’ 30 credits are necessary.

In Minnesota, legislation under consideration would allow 4-year degree holders to become a CPA in the state after gaining 2 years of professional experience and taking the CPA exam or by completing 1 year of work experience, 120 hours of professional education courses, and taking the CPA exam (candidates could also still complete the current path of 150 hours of college credit). The legislation was introduced by a bipartisan group of lawmakers in February and have the support of the Minnesota Society of Certified Public Accountants.

However, the Minnesota legislation faces firm opposition from national industry groups, including the Association of International Certified Professional Accountants (AICPA), which argues that the new requirements would mean that CPAs licensed in Minnesota could not practice outside the state and that these CPAs would not be able to work for large accounting firms with clients around the country. At the same time, the president of the Ohio Society of CPAs noted that Ohio accountants have had no barriers to practicing nationally despite the fact that candidates can obtain a CPA license in Ohio by completing 120 hours of college credits, 4 years of work experience, a score of 670 on the Graduate Management Admission Test, and passing the CPA exam.

Altogether, the recent debate about the credit hour requirement to become a CPA reflects discussions in other industries (including among financial planners) about the appropriate requirements needed to give the public confidence that a certified individual will provide quality service (and shows the challenge of maintaining a certification governed by each state rather than by a single national body). Further, it demonstrates the challenge for industries in balancing the requirements for entry and the desire to maintain high standards with maintaining a steady flow of candidates (who might be enticed by other professions where they can start earning money sooner!) needed to keep the profession healthy.

CFP Board Announces Members Of New Standards Commission As It Puts Certification Standards Under Review

(Financial Advisor)

From time to time, CFP Board has reviewed its certification and Continuing Education (CE) requirements to ensure they are meeting the needs of the organization, its certificants, and the broader public. The latest round kicked off in December, when CFP Board announced that it would form a Competency Standards Commission in 2023 to review and evaluate its competency requirements for Education, Examination, Experience, and CE to earn and maintain the CFP marks, addressing topics such as the amount of CE credits that CFP professionals should need to earn on an ongoing basis (and what content, from providing pro bono service to taking practice management programs, should qualify), current education requirements to get the CFP marks in the first place, and the efficacy of the Experience requirement.

Earlier this month, CFP Board announced the volunteer members of the new Competency Standards Commission, who will serve through 2024. They include individuals from financial services firms, educators, certification and credentialing professionals, and other stakeholders. The commission includes several former chairs of the board of directors of CFP Board, including Jack Brod (who will chair the commission), Kamila Elliott, the immediate past chair of the board, and Susan John, who led the board of directors in 2019. Other members of the commission include Sonya Lutter, founder of the Financial Therapy Association and Khiara Cureton, a financial planning intern at Abeona Wealth and a candidate for CFP certification, among others.

Following completion of its review, the commission will finalize its recommendations on any proposed changes, subject to a public comment period and deliberation and approval by the board of directors of CFP Board. CFP Professionals and other stakeholders will be given the opportunity to provide feedback to CFP Board on the current certification standards as well. Which is important, given that the commission is likely to cover a range of key issues for both current CFP professionals (e.g., CE requirements) and for candidates for certification (e.g., education and experience requirements), the review will play an important role in determining the competency standards (e.g., whether an undergraduate degree should be required in addition to prescribed financial planning coursework) not only for those aspiring to become a CFP professional, but also ensuring that current mark holders maintain (and continue to be educated on) the skills necessary to provide competent service to their clients!

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