October/November 2004

by, Paul M. League

Financial Planning, as a profession, began with laudable intentions and standards founded on integrity. However, the process of becoming a Financial Planner is being seriously compromised. If planners are interested in preventing destruction of their careers and of the profession itself, they need to understand the root cause of the problem.

The federal government is being courted to appoint a Self-Regulatory Organization (SRO) to control the ethics and practice of Financial Planners. No nominees have been identified, and the need of an SRO is yet to be debated. Should an SRO be determined necessary, great caution must be taken that the nominee be an entity with a history of impeccable integrity and unyielding ethics.

In 1985 a new CFP Board took over and made the initial step to gain the SRO by trade marking their CFP® designation. In 1990 they finalized this by also changing the name of the original Financial Planning educational program into a so-called “certification program”. They explained such steps as improvements in “standards” for better “protecting the public”, instead of admitting their real reason, which was to seduce the government into appointing them the SRO. Twelve years later, in 2002 FPA meetings, then CFP Board President Rick Adkins finally confessed that the structural makeover of trade marking and program name changing, were in fact done to secure the SRO, a process that required them to meet a total of “six such governmental conditions”.

Why discuss such issues now?

It is alarming to learn that an entity with such a documented history of misleading, unethical actions, may be awarded ethics control over anyone. Their blatant misrepresenting of the facts reflects a pattern also seen in the following, now historical, controversies, all of which were only finally resolved due to massive opposition by CFP® Stakeholders:

· the Practice Standards controversy, where input over their existence, or content, had been denied Stakeholders until Gib Kerr, QFP, CFP® caused them to include Stakeholder input.

· the “CFP-Lite” controversy, where they attempted to water down the CFP® designation with a new “associate” designation label (intended to increase revenues from Broker-Dealers), again without informing Stakeholders, until Nigel Taylor, CFP® caused them to end the initiative.

· the “CFP PRACTITIONER” controversy, where they had for over four years authorized designees to popularize its use, while defiantly stating it was merely a “descriptive term”, until exposed by me as a pended trademark intended to divide planners into elites and entry-level, which resulted in their lapsing the filing and ended the initiative.

If the CFP Board becomes the SRO, it will result in a loss of 2/3 of the presently equally qualified planners bearing other designations. The CFP Board already indirectly excludes these planners through actions it supports by the FPA. These planners are unlikely to be included post-SRO. A public in need of more planners, not fewer, can’t benefit by such massive disenfranchisement. To get back in these planners will be required to redo education in the form of a costly so-called “certification program”, promoted as necessary, when unproven to be.

CFP® designees have unwittingly financed CFP Board ill-conceived initiatives through so-called designation “re-certification fees”. A PhD credential, once earned, demands no reoccurring fees, yet the CFP Board’s renamed “certification program” requires biannual $360 “re-certification” fees. This has enabled them to collect excessive, duplicate, credentialing fees, which if not paid result in the graduate’s (now renamed “Certificant”) unjustified loss of the use of the designation. The separate exam component of the renamed CFP® program adds another $595 each time taken until passed. These added revenues well exceed those of the original program, and other comparable credentialing programs that have proven to well serve both planners and public interests.

“Re-certification” is really a misnomer, because what really happens is the sending of a “renewal” form that asks “certificants” to attest that they have completed 30 hours of biannual continuing education and complied with certain Ethics. There is no “re-test”, or anything else particularly expensive in the “renewal”. Many argue such biannual fees should be reduced to reflect actual administrative costs, or just eliminated.

Meeting operational expenses is a necessity. However, their high fee income appears more for purposes of advancing their invented SRO job than towards unifying a profession, serving their Stakeholders, promoting the designation, or promoting the benefits of Financial Planning.

The FPA, which is supposed to represent and benefit an entire profession, declares support for only one segment; namely, those with a CFP® designation. The FPA thereby indirectly financially benefits the CFP Board, who, in return, cedes to it the planners referral function. However, for planners to receive referrals they must also be a $275 yearly dues paying FPA member – being a CFP® designee isn’t enough. The FPA lobbies for the CFP Board, while its members are prevented from nominating themselves, or other candidates for a position on the FPA National Board. Additionally, members are not provided information or a vote on such dangerous CFP Board initiatives as the over 12-year denied SRO. One has to question the value in an FPA that ignores its members by providing them no vote, disenfranchises all other planners, has excessive dues costing more than what equates to the annual renewal fees of the CFP® designation itself ($275 vs. $180), and whose leadership doesn’t answer to anyone, least of all its members.

This “CFP® program makeover”, along with all of its increased fees, has raised CFP Board annual revenues of over 12 million, and nearly 8 million for the FPA. Stakeholder designees are being unfairly taken advantage of financially for arguably no measurable benefit. The truth is that the original program, before the name change, coupled with continuing education, provided sufficient “standards” and protections for all.

The CFP Board’s entire SRO concept is based on the questionable premise that an SRO is needed, or that the Government seeks to appoint one. With few egregious abuses by Financial Planners that are not already addressed by the SEC, NASD, State Insurance and Accounting bodies, many find no need of an SRO.

The recent CFP Board appointment of Attorney Sarah B. Teslik, as CEO, is intended to seal the SRO deal. If unchecked this will stop most planners from even calling themselves “Financial Planners”. New, burdensome and costly SRO stipulations will have to be met, resulting in final nullification of these other 75,000 equivalently credentialed planners. CFP® designees are not immune. Potentially litigious CFP Board “Practice Standards” will no longer be limited just to them, but will apply to all. The additional 2006 CFP Board requirement of a Bachelors Degree will be followed by the CFP Board, through the FPA, openly distinguishing planners by devaluing those with degrees against those without.

These are real dangers systemic to the CFP Board, and the FPA, due mainly to their failing to implement democratic principles of honest and open dialogue, equal representation and voting rights.

It’s out of control. Stakeholders have no say. Are there alternatives?

IAQFP.org, having a respected history of leadership that has exposed CFP Board ill conceived initiatives, offers the solution. IAQFP has proven that a voting Membership can ensure both the necessary finances, and safeguards, without an SRO.

IAQFP introduced the QFP (Qualified Financial Planner) designation, to serve as the single, universal designation, unifying all equivalently qualified Financial Planners. IAQFP achieves unification by having already granted use of the QFP to all those having earned any of 5 equivalent Financial Planning designations [ChFC, CFP®, PFS, MSFS or MS (the latter two with a concentrated study in Financial Planning)], that, regardless of “CFP® re-certification”, maintain 15 hours annually of diversified continuing education. Those doing so are a QFP, a lifetime, fee free credential.

IAQFP has codified this with a free Registration offer to these over 100,000 authorized QFP users in the “QFP Verification Registry of Qualified Financial Planners” (www.iaqfp.org/register.html), the place the public is urged to verify the qualifications of anyone claiming to be a Financial Planner. IAQFP also encourages Membership to provide funds to support its solution, at rates over 2.5x less than those of the FPA, minus CFP Board costs.

If CFP® designees, and others, don’t act now, we will be left with a profession whose “CFP Board-SRO Wannabe” will continue its pattern of dangerously misleading, unethical conduct. Their actions have proven to fail to serve those they purport to represent most, while also threatening to harm and disenfranchise all other planners.

The CFP Board has merely demonstrated they know how to create unwanted initiatives that increase revenues through a baseless program name-makeover, and FPA divide and conquer tactics. Such steps have only resulted in empty so-called “higher standards” producing no meaningful Stakeholder or public benefit.

A simple solution exists that solves all of these problems; namely, for all duly qualified Financial Planners to immediately use the QFP as your primary Financial Planner indicator, for it renders irrelevant both the CFP Board and the FPA, while also nullifying such damaging initiatives as SRO.