The Future of the FPA, the CFP Board and the Organizations that Run the Planning Profession

Associations

Privately, I received more than 100 responses to my questions, and not surprisingly, the answers were at once passionate and nuanced. Let’s start with the discussion of association consolidation.

Norm Boone, at Mosaic Financial Partners in San Francisco, believes any discussion of consolidation should begin with an understanding of why associations exist. What’s the purpose of one, or many, associations in the first place?

“Professional organizations like the FPA, NAPFA, IMCA, the PFP arm of the AICPA are necessary to do things that individuals and individual firms (especially small ones) are less able to do for themselves,” he says. These include providing

1. continuing professional education;
2. political advocacy;
3. marketing and advertising for the broader profession; and
4. providing networking opportunities within the profession.

By this logic, larger (and, therefore, consolidated) would more beneficial to the profession than fragmented and smaller.

“While it is hard to argue that professional associations don’t sometimes get complacent,” Boone adds, “I believe this misses the point. The organizations should be serving their members in the best way possible. Is a small or a large organization better able to do the four tasks that are needed by its members? I would argue that most of the time, larger organizations can be more powerful and thus more effective at each of these mission-level tasks.”

Failing a physical consolidation, Boone believes that consolidation of message should be prioritized among the associations. “We have multiple organizations that are competing more than they are coordinating,” he says. “In marketing and in political advocacy, the organizations and their participants do not speak with a consistent voice. The result is confusion about who we are and what we stand for. The organizational competition keeps the organizations on their toes,” he concedes, “but it hurts us all in moving us toward the end goal of one profession, widely-recognized and highly-regarded.”

But what about my point that the current FPA has fewer members as a consolidated organization than the ICFP and IAFP did 18 years ago? Boone believes that the profession has less passion than it did when it was struggling for respect and survival in a hostile, sales-driven environment.

“Twenty years ago, people in the profession were missionaries,” he says. “They were creating a profession. It was exciting. Consistent and frequent progress on important issues was tangible. Less so today,” he adds. “Most members of the financial planning profession have, at this point, accepted that they are advisors and fiduciaries, and while they wish the traditional brokers and hybrid variety of advisors would be more honest about what they do and don’t do, I think they feel like they’ve won that game in the marketplace and the value of that game is no longer as important as it once was.”

You can reduce it to an equation: less passion, less at stake = fewer people motivated to join their membership association.

Charlotte Beyer, founder of the Institute of Private Investors, author of Wealth Management Unwrapped, Revised and Expanded, is also in favor of consolidation. She says that she sees too much turf warfare among the associations. “Each association is justifiably proud of what it’s created, but unwilling to come into one tent for the benefit of the consumer,” says Beyer. “Maybe under one tent, the various groups could better define what they truly stand for and meanwhile offer the public a unified vision of what financial planning and wealth management can and should be.”

Boone and Beyer are implicitly questioning the effectiveness of our current multi-association approach to moving the profession forward. Mark Tibergien, CEO of Pershing Advisor Solutions, made a similar point when he invited me to compare the laser-like focus and power of the Financial Services Institute (FSI) and the Securities Industry and Financial Markets Association (SIFMA) with the financial planning-oriented associations. He didn’t come right out and say this, but when I viewed the financial advisory profession through that lens, the planning profession’s organizations have a lot less clout (to put it kindly).

How could the FPA, NAPFA, the Investments & Wealth Institute, the CFA Institute and the AICPA PFP section achieve similarly powerful results on behalf of their members? Tibergien suggests that we start with a blank sheet of paper and figure out the best way to address some key issues that are important to the profession’s health and evolution.

This is his list:

1. Clarity around titles, definitions and the level of responsibility that advisors owe to clients;
2. Stronger industry advocacy on the state as well as the federal level, promoting the profession while advocating for consumer protections;
3. Training, certification and continuing education; and
4. Workforce development of talent and talent recruiting.

“The financial advice business has evolved to such a point where we need to unbundle the issues and then contemplate a structure or multiple structures that will allow us to be more coherent in our approach to driving the business forward,” says Tibergien.

This introduced an interesting theme among the respondents to my competition versus consolidation question. Many advisors said, in one way or another, that the current lineup of associations provides plenty of competition, but their competition for membership is not effective in the things that matter. David Jacobs, of Pathfinders Financial Services in Kailua, HI, spoke for many when he said that he doesn’t see any of the membership organizations putting significant resources behind the key deliverables that would push the financial planning profession forward.

His wish list for the associations includes:

1. Strong advocacy for regulation of financial planning as a separate profession;
2. The collection and dissemination of evidence-based research and publication on best practices; and
3. Best practice standards.

I received a number of complaints specifically directed at the FPA, which seemed to pinpoint why some of the enthusiasm has leaked out of its membership. Some echoed Beyer’s point about lack of clarity about the organizations’ central purposes. Several said they believe the FPA has increasingly gravitated toward serving itself (and trying to attract the broadest possible membership) rather than taking controversial stands or investing in the progress of the larger community of planners. “I stopped going to local chapter events, because they were mainly comprised of insurance agents and brokers,” says Janet Tyler Johnson, a staunch fee-only fiduciary advocate.

“Right now,” says George Gagliardi of Coromandel Wealth Management in Lexington, MA, “the FPA’s desire to serve too many masters appears to be diluting its cause and eroding its membership.” If the FPA were to merge with NAPFA, he says, then history would repeat itself: “initially a larger membership, dissipating over time, and no meaningful changes to FPA’s approach to the profession.”

Mike Searcy, of Searcy Financial in Overland Park, KS, once served as president of his local IAFP and ICFP chapters. After the merger, he was dismayed to see product vendors obtain and (in his view) cheapen the CFP mark, and began looking for a new home that was aligned with his increasingly strict fiduciary mindset.

“When we moved strictly to the fee-only arena, we joined NAPFA,” he says. “To hear that it might be thinking about merging with the FPA terrifies me. I think it would be a terrible mistake. My hope,” he adds, “is that NAPFA will stay independent and become the home for fiduciaries.”

Others said that the FPA seems to expect its members to support the organization, rather than the other way around – undermining the argument that it exits to pool resources and deliver services. “Other than some networking at a few lunches, some CE and the magazine subscription, it is hard to identify much value,” says Robert Higgins, of Dalton Financial in Charlotte, NC.

There is, however, some passion around NAPFA, and this existed, remarkably, even among advisors who complained that they don’t currently qualify for NAPFA membership. “I would have joined NAPFA, but I derive about 1-5% of my annual revenues from fixed insurance products, so I cannot,” says Anthony Rosetti, a CFP certificant with Heritage Financial Services in Winter Park, FL. “But I believe very much in the fee platform of serving clients in this industry.”

“I’d join NAPFA because they are purer about financial planning,” adds Tom Garnter, of ISC Financial Advisors in Minneapolis, MN. “But it won’t let me in because our RIA has a BD affiliation, even though I would be willing to never accept term-life commissions.”

Designations

The responses around unifying designations clustered around the magnetic poles of the Jean-Luc Bourdon and Carolyn McClanahan positions. The majority of responses supported the idea of a consolidated designation as a way to help the poor consumer figure out who is qualified to provide competent advice.

“It confuses me, someone in the industry, all the different designations that are out there now,” says Ralph Schroeder, who practices in The Woodlands, TX, speaking for a number of respondents. “I can just imagine how difficult it is for consumers!”

“To me it is simple, we need one designation like MD, JD, CPA for our profession,” says Jean Fullerton of Milestone Financial Planning in Bedford, NH. “Because this is the only way for it to be understandable for the clients.” Like McClanahan, Fullerton proposes some subspecialties under the blanket designation, similar to a dermatologist or surgeon in the medical field.

But Fullerton also supports Bourdon’s skepticism about the management of the CFP designation, when she confesses that she isn’t sure she trusts the CFP Board to handle that much responsibility. “Maybe the states could manage it, like lawyers who pass the state bar,” she proposes.

Bourdon fears what he calls a “CFP monopoly,” and he feels the PFS designation has been more consistent about upholding higher standards than the CFP counterpart. “CPA financial planning fully blossomed because of its professional roots,” he says. “As a result, the AICPA financial planning standards have always been fully aligned with the public interest, and are the only ones to be regularly enforced.”

I heard from other respondents who agree that the CFP Board has been less-than-diligent about enforcing high standards of care, making them less-than-enthusiastic about entrusting the profession to its administration. One advisor who asked to remain anonymous confesses that he is a big fan of the new Code of Ethics and the fiduciary requirement, and is now completing the coursework to earn the CFP designation. But he also thinks that the CFP Board has acted out of hypocrisy in its embrace of non-fiduciaries over the years.

“It’s got a huge conflict of interest between seeking to grow the membership, and thus its own profit, versus actually enforcing a fiduciary requirement on its membership – which would reduce its membership, its profit, and the ability to pay high salaries [to its senior executives] ,” he says. “It appears that in the past it’s opted to favor membership growth by welcoming pretty much anybody who passes the exam,” the advisor adds. “There are many CFPs acting in a matter which I personally do not believe is in their clients’ best interests, yet those CFPs have been welcomed with open arms to use the CFP mark.”

Gagliardi worries that there is no oversight over how the CFP Board collects or spends its money. He specifically is concerned that the CFP Board has “run an expensive ad campaign funded by a significant increase in membership fees that has done little to improve the situation of the individual CFP certificant.”

A third way

Finally, this nuanced conversation attracted some advisors who said we are talking about the wrong topic altogether.

Philip Weiss, who holds the CPA and CFA designations (and is considering the CFP) thinks that the most important issue is not having a single designation, or single association, but for all the designations and associations to put their resources behind better policies and initiatives.

“We should all unite in fighting for the fiduciary rule and in providing a strong set of qualifications for those that serve in the profession,” he says. “I think your argument should be centered on ‘fiduciary’ and ‘fee-only’ over ‘suitability’ and ‘getting paid for selling product’.”

“I agree that a free marketplace generates better solutions, drives competition and improvement,” adds Ann Alsina, who practices in Annapolis, MD. “I believe we should have a number of membership organizations and specialized certifications or designations that require true mastery of relevant material.”

But she also believes that a true profession requires something that none of the associations or designations are pursuing right now. “If financial planning is to be a profession, there should be a barrier to entry,” she says. “To be an attorney, one must not only complete law school, but also pass the bar exam. The same need for professional certification is true for doctors, CPAs and engineers. Today,” she adds, “anyone can hold themselves as a financial planner with no education or certification.”

Bill Ward, of Ward & Associates in Rancho Santa Fe, CA, thinks that any merger of the current credentials would be largely irrelevant in the absence of things that other professions have, like a standardized minimum education requirement, competency exams and an official status as a profession. “Until the government mandates higher standards or the public demands them, I think the status quo will live on,” he says.

The rekindling

Is there a consensus here? Obviously not. But the discussion has uncovered some important needs currently not being met by our competitive association structure and designations. What advisors want is not more competition or consolidation, but more effectiveness, on a par with the organizations, FSI and SIFMA, that support the sales entity members. They also want their associations and designation providers to become a lot more focused on building the foundations of a real profession, which includes legal barriers to entry and regulation (provided, if I read the messages correctly, by a government entity, not an association); a body of knowledge that the profession can refer to; much more effective advocacy among regulators and members of Congress; and the courage to exclude dues-paying members or exam-passers who don’t measure up to the highest standards of professionalism.

The people who responded to my questions are clearly yearning for exactly what Norm Boone says is missing: a reason to believe that they’re part of something remarkable, that they and their organizations are making real progress toward serving consumers and building our society’s next real profession. Regardless of whether we have one association or many, one designation or several, this is what would rekindle that lost passion that attracts association members and loyalty to our professional designations.

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. Or check out his Insider's Forum Conference (for 2018 in San Diego, CA) at www.insidersforum.com.

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