Why Making Financial Planning a True Profession May Harm Consumers

On December 28, at approximately 10:00pm ET, a correction was made to this article. In the original article, certain statements were misattributed to Ron Rhoades. Specifically, Ron has not written or advocated that the CFP Board should be “at the helm of a future profession” or that it should have “singular authority over policymaking by limiting the ability to practice financial planning exclusively to those who have attained the CFP designation.” This version accurately reflects Ron’s views and prior statements. For more information on Ron’s and JR’s views on this matter, please read this APViewpoint conversation.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Like many financial planners, I hope for the day when we are accorded the same professional stature as lawyers and accountants. But the CFP Board should not be put at the helm of that future profession. That would harm consumers and erode the public trust we have worked so hard to engender.

This article is a rebuttal to Ron's December 4, 2019 Advisor Perspectives article, How Financial Planning Can Become a True Profession. Ron is the director of the financial planning undergraduate degree program at Western Kentucky University. He holds a Juris Doctor degree and is a CFP certifcant. Ron is a frequent contributor of op-ed commentary advocating for the advancement of the financial planning by making the CFP Board the standard-bearer for the profession.

In his latest piece, Ron provided an outline of the characteristics that elevate an industry to a true profession. In doing so, he explained the value of professional standards to consumers, and why, in his view, the financial planning industry falls short of being a true profession. The central thesis of his commentary is that the public interest would be better served if the financial planning industry were to become “a regulated, true profession.” He wrote positively about the CFP Board of Standards, particularly with respect to its course of study and its fiduciary standard. One might infer that the goal of elevating planning to a profession could be best and most expeditiously attained by granting the CFP Board of Standards singular authority over policymaking and by limiting the ability to practice financial planning exclusively to those who have attained the CFP designation, although Ron did not call for those steps to be taken.

I generally agree with Ron’s assessment that the financial planning industry is not a true profession in the way that law or accounting are regarded as such. I also agree with his view that consumers would benefit and public trust would be gained by having the financial planning industry regulated separately from brokerage and investment advisory services and from the establishment of educational qualification standards.

I do not believe that the CFP Board of Standards is the right organization to assume responsibility for the public trust in the same manner as the American Bar Association does for the legal profession and the AICPA does for the tax and accounting profession. Far from being the solution for advancing the financial planning industry, the CFP Board’s fostering of consumer mistrust and regulatory confusion actually make it the source of many of the industry’s problems.

Some might even claim that the CFP’s Board's offenses were willful, consistent with the way that term is applied in the law, as in, "willful neglect." For example, in tort law, if a property owner maintains a dangerous open pit on his property and a person walking on the property is injured or dies from falling in, the property owner may be guilty of willful neglect because he should have known there was a reasonable possibility for harm. The CFP Board knew for decades that some segment of its members used its mark to defraud people, so it could be considered willful when it tells consumers in its advertisements that all CFPs are trustworthy and thoroughly vetted. Similarly, by spending millions of dollars on advertisements implying (inaccurately) that financial planners are unregulated and suggesting that it is the highest regulatory authority, the CFP Board should have known that its messaging might actually be a root cause of the consumer confusion that it is now gallantly willing to step up to resolve.