Underscoring Why The Financial Planning Coalition Is Headed In the Wrong Direction, 1,100 Advisors Attended AICPA’s Financial Planning Conference

Thursday, January 24, 2013 21:47
Underscoring Why The Financial Planning Coalition Is Headed In the Wrong Direction, 1,100 Advisors Attended AICPA’s Financial Planning Conference

Tags: CFA | CFP Board | Dodd-Frank | fiduciaries | financial planning | FPA | IMCA | NAPFA | profession | regulation | RIAs | SRO

With AICPA saying 1,100 advisors attended its financial planning conference this past week, the importance of CPA financial planners to the financial planning profession is self-evident, as is the unrealistic and ill-advised position of the Financial Planning Coalition on how best to protect consumers and regulate the financial advice business.

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The 30% growth in attendees at the AICPA conference, which stands in stark contrast to the falling attendance in recent years at FPA’s annual meetings, highlights the need for a broader vision of the profession from the Financial Planning Coalition (FPC).


With a new Congress now in session and the Consumer Financial Protection Bureau preparing to consider ways to implement the 2010 Dodd-Frank legislation regulating the financial advice business, CFPs are being represented by the FPC—a coalition of CFP Board, Financial Planning Association (FPA), and the National Association of Personal Financial Advisors (NAPFA). But is the FPC serving CFPs and consumers well by pursuing a separate bid with CFPB for regulation the advice profession instead of creating a broader coalition with other professional designations?


The CFPB is a federal super-agency created by 2010's Dodd Frank legislation to oversee regulation of the U.S. financial services industry. President Obama today re-nominated former Ohio Attorney General Richard to lead the CFPB. With President Obama elected three months ago to a second term, CFPB and the administration is gearing up to make crucial decisions about how RIAs and registered reps will  be regulated. Postponed for the last two years, the long-awaited decision on the regulation of RIAs and registered reps is likely to be decied in 2013 or 2014.


Financial Planning Coalition is unilaterally pursuing its own path with CFPB to create a regulatory framework for financial planners. CFP Board recently made several recommendations to the CFPB, including the establishment of a ratings system for senior-oriented financial services designations. The Coalition would like to make CFP Board the self-regulatory body of financial planners.


However, CFPs must ask themselves: Would any regulatory bid that does not include a broader coalition of professional designations—Chartered Financial Analysts (CFAs), CPA Personal Financial Specialists (CPA/PFSs), Certified Life Underwriters (CLUs), Chartered Financial Consultants (ChFCs), Certified Private Wealth Advisors (CPWAs), and Certified Investment Management Analysts (CIMAs)—serve consumers’ best interests?


Does it serve the profession well?


Wouldn’t a broader coalition of professional bodies carry more weight with regulators and provide a better regulatory solution to consumers?


At 1,100 attendees, the AICPA conference this past week attracted half the 2,000 advisors who reportedly attended the FPA annual meeting in September 2012, and attendance is likely to grow again next year as more of the nation’s 380,000 CPAs specialize in advising clients on personal finance as fiduciaries. The influence CPAs have on financial planning professionals and the nation’s 67,000 CFPs is thus likely to grow in the years ahead.


Meanwhile, CFA Institute, which has 50,000 U.S. Charterholders and is widely accepted as the global standard-setting body for investment advisers to high-net-worth individuals, is experiencing an explosion in the growth of its private wealth advice division. Since the Global Settlement of 2003, Wall Street analysts have been driven toward advising individuals. A third of all CFAs advise individuals now and that number is growing by about 2,500 a year. In addition, Investment Management Consultants Association (IMCA), another accreditation body for financial professionals with about 8,800 designees, is experiencing about 5% annual growth in its CIMA and CPWA designations.


The Financial Planning Coalition—to truly represent financial planners—must broaden its perspective and work with other professional designations. To pursue its own path is unrealistic and self-serving.


While the CFP Board and the Financial Planning Coalition rightly say the CFP sets the standard of excellence in providing comprehensive financial planning advice, CFPs don’t make their money on financial planning. They make their money on investment advice. So saying the CFPs are better advisors to individuals on personal finance matters is disingenuous and does not befit a group that claims it wants to do what is the best interest of consumers.


To promote competition and advance turn the financial advice business into a profession, the Financial Planning Coalition must be a real coalition and represent a broader swath of financial advice designations than just CFPs.  



Comments (5)

Well said Andy. As a CFP and a CPA/PFS myself, as well as a CFA and CIMA, I believe the appropriate best answer will come from a broader coalition of right thinking organizations willing to put their individual differences aside for the betterment of the public interest and the "profession" of financial planning. Also, just to clarify and further make the point about the growth of the AICPA's annual financial planning conference, and the sheer size of the organization's membership, the conference grew from just over 700 last year to 1,100 this year, well in excess of 50% growth. The current AICPA membership is at about 380,000 with an estimate of over 600,000 CPAs practicing at this time (a CPA is not required to join the AICPA).

Thanks for keeping the regulatory reality of our industry in focus. It is coming and we need to be prepared to participate.

Clark M. Blackman II
cblackman , January 25, 2013
I'll dodge the credential debate but I did want to say that the AICPA program was one of the best I've ever attended ( with much credit going to Clark).

Harold Evensky
hevensky , January 25, 2013
Slogans are helpful to energize movements. The simplistic appeal of a rallying cry has the power to propel change—even revolutions. Yet, to avoid going overboard, movements must resist turning slogans into dogma. At some point, movements must mature and pragmatically address a broad and complex reality. Of course, much damage can be done before they reach that point. For financial planners, now is the time to drop the ironically divisive “one profession, one credential” mantra for a truly unifying and realistic approach.
jean-lucb804 , January 25, 2013
Andy, you have crystallized the issues in a well written piece. Many of the designations you've mentioned require a more rigorous process than the CFP (such as PFS and CFA). NAPFA's recent decision to limit new membership to only CFPs is an example of exclusionism disguised as consumer protection. Please keep up your efforts in bringing this serious matter to the attention of those who serve their clients well - with or without the CFP designation.
SherylCPA , January 27, 2013
"NAPFA hates Andy," an advisor recently told one of my staff members at Advisor Products. That really hurt. I'm just trying to do the right thing. So your supportive comment is appreciated.

And my guess is most NAPFA members value truth and understand that their leadership--along with FPA and CFP Board--are on a bad path that makes the Financial Planning Coalition look silly.

Thanks for saying your piece.
agluck , January 27, 2013

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