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The registered investment adviser (RIA) community should take notice of recent commentary from former Financial Planning Association (FPA) president, Dan Moisand. In two recent Journal of Financial Planning pieces (“Collective Wisdom”,JFP, September 2008 and “The Financial Planning Act of 2008”, JFP, October 2008), Mr. Moisand expressed his opinion that RIA representatives who practice financial planning but do not hold the CFP designation are “faux planners,” and stated his desire to push for legislation that would make the use of the term “financial planner” the exclusive domain of CFP certificants.
In staking this claim, Mr. Moisand makes two presumptions that should not go unchallenged. First, he presumes that only CFP certificants have the academic qualifications to give financial planning advice. Although I have tremendous respect for the College for Financial Planning and do not dispute that the CFP program provides a valuable practical education for people who wish to enter the planning field, it is not the only legitimate path to planning expertise. This should be obvious considering that, prior to 2007, one did not need a college degree to become a CFP candidate, and that, unlike most university level finance and economics programs, the CFP program has no academic screening or admissions standards (other than a minor industry service requirement).
Does Mr. Moisand really believe that an RIA who holds, for example, a PhD. in Finance, an MBA, or the CFA designation is less academically qualified than a high school graduate who managed to successfully complete the College’s correspondence coursework and pass the exam?
As an adviser who has taken a few CFP courses as a matter of intellectual curiosity, I found the curriculum to be informative and well-suited as a broad-based introduction to financial planning. However, it was largely 101-level material, and it was far less technical and sophisticated than the coursework for my Economics degree at Williams College. Mr. Moisand may have a point in his October article in noting that non-CFP RIAs may have less training in the non-investment related aspects of financial planning. But topics such as estate planning, long term care planning, insurance planning, asset protection, disaster preparedness, and identity theft protection are qualitative in nature., It is far more important to have technical sophistication with respect to investment planning.
Mr. Moisand’s recommendations, if followed, lead to the unreasonable conclusion that someone who has made the academic and financial commitment to attain an advanced degree or even a four-year undergraduate degree in finance or economics would be forced to repeat much of their elementary studies and/or take course work that may have no relevancy to their individual businesses by enrolling in the CFP candidacy program.
Mr. Moisand’s second presumption is that the CFP Board’s Code of Ethics leads to a higher standard of ethical conduct. While it would be nice if this were true, Mr. Moisand’s view that the presence of a moral standard correlates positively with superior ethical behavior is naïve and unsupported. In fact, the fiduciary standards to which RIAs are held today may hold advisors personally liable (and subject to civil and criminal penalties) for failing to act in the best interests of their clients.
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