If there’s one topic that is guaranteed to stir up passions in the financial planning/advisory profession it’s consolidation of associations and credentials. Consider some of the issues that are being debated today.
Many professionals (including me) are still having trouble getting over the merger in 2000 between the IAFP and the ICFP that produced the Financial Planning Association (FPA). They argue that the new consolidated organization watered down the ICFP’s core mission of supporting the CFP designation and professionalism in the marketplace, by accepting sponsors in the local chapter meetings, and by including advisors who are clearly not fiduciaries into the association ranks. Some chapters are largely made up of dually-registered advisors who wear “two hats” when they engage clients, along with life insurance agents who sell for a living. Many members don’t hold the CFP designation and a significant number are not financial planners at all. The result, they say, is a weaker sum of the parts.
This may explain why, despite the growth of the profession and the expanding ranks of the CFP-holders, the FPA has fewer members today than the two organizations had at the time the merger occurred.
Leaders of the FPA, meanwhile, have adopted the slogan “one profession, one designation” – and have argued that everybody in the profession should jump on the same ship, so that one association would have the power to speak on behalf of the entire profession. Think of the things they could do with a membership that included everybody who called themselves a financial planner or advisor!
Of course, that argument was made at the time of the ICFP/IAFP merger, when there were big visions about how the FPA could become the nerve center of the profession through robust online discussion forums, a strong professional magazine and a book publishing division that would bring together the profession’s thought leaders.
When I wrote about the AICPA PFP Section recently, suggesting that the CFP Board come to an agreement that would grandfather people with the CPA/PFS designation under the one designation principle, there was an uproar in my email inbox – arguing against the idea both from the PFS holders and CFP practitioners. The most compelling argument came from a CPA/PFS planner who wondered if I had forgotten all the benefits that come from free and open competition. When there are competitors, each is motivated to provide more and better member benefits (PFP Section vs. the FPA, for example) and to promote rising ethical and education standards (PFS designation vs. CFP). When you eliminate competition, the result is complacency, which is not desirable in a dynamic, evolving profession.
Perhaps the most combustible discussion has centered on the FPA’s efforts to “merge” with the National Association of Personal Financial Advisors (NAPFA). I put the word “merge” in quotes, because the proposal basically means that NAPFA would become a subsidiary of the FPA – that is, a small minority of the larger association who would be fee-only and live under the strictest fiduciary standards. NAPFA has rebuffed these overtures, believing that:
- They are best positioned for the increasingly fiduciary, fee-driven future of the profession; and
- They should continue functioning as the consistent independent advocate for that future on behalf of all professionals.
And, once again, I’ve heard FPA and NAPFA members argue for the benefits of competition.
There are legitimate arguments on all sides here. If there were a merger of associations, then the professional members would benefit from more concentrated resources, and perhaps greater influence on what happens with regulators and Congress.
If there were a merger of designations, then the public would have an easier time distinguishing the one designation that matters from a lot of other combinations of capital letters that advisors can achieve with a weekend of diligent study and test-taking.
But if there were a single designation, that would put an awful lot of power over the profession into the hands of a single entity. Already, many advisors are nervous about the CFP Board’s influence and the unpredictability of its actions.
And where does the rapidly-growing Investments & Wealth Institute (formerly IMCA) fit into this matrix, with its CIMA and CPWA designations becoming increasingly legitimate competition to the CFP and PFS in the investment space? Or the CFA Institute, a strong investment-centric organization with its own designation (CFA), that is increasingly supporting its members as they expanding their services into holistic wealth management services? We seem to be getting more competition in the financial planning space; is that a good thing or a problem?
An advisor I respect, Jean-Luc Bourdon (who happens to be a PFS-holder) recently told me that this whole conversation is fundamentally about the heart and soul of financial planning. Should it exist in a pluralistic competitive landscape of different visions and service platforms? Or should it become a consolidated organization or designation that speaks for the profession as a whole?
If you have feelings about this, please let me hear them. You can post a comment on APViewpoint or send me an email here.
Bob Veres' Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog at: www.bobveres.com.
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If there’s one topic that is guaranteed to stir up passions in the financial planning/advisory profession it’s consolidation of associations and credentials. Consider some of the issues that are being debated today.
