“The revolution that began in December 1969,” according to the opening page of "The History of Financial Planning: The Transformation of Financial Services" (John Wiley and Sons, 2009), “was intended to help ordinary Americans gain control over their financial destinies.
In their book about the origins of financial planning, H. Oliver Welch and E. Denby Brandon don’t explore this idea because it was a given that financial planners would serve the masses. But CFP licensees must come to grips with the fact that serving “ordinary Americans” is fallacious.
The economic reality of America today forces CFP professionals to go up-market. CFPs can’t as easily make a living serving ordinary Americans as they could in the 1960s and 1970s, when the CFP movement began. In fact, CFPs face growing competition in serving the mass affluent.
Look at this TV ad that the CFP Board is running now on national TV, called “Let’s Make A Plan.” It’s about planning. Truth is, however, most of the clients CFPs want don’t need a plan. They have enough money not to need a plan.
While budgeting is one of the key words in the value proposition outlined in the CFP Board’s ad campaign ad, most investment advisors prefer clients that don’t need a budget. Should the CFP mark be marketed to the masses, as it is done now in a CFP Board TV campaign?
Which brings me to my question: Are CFPs burdened by a curriculum and history that is out of step with today’s consumers of professional financial advice?
Most other professional designations for financial advisors are not burdened by the CFP designation’s history of targeting the middle class. Teachers, middle managers, and factory workers were never thought to be ideal clients on which to build a professional practice by CFAs or CIMAs, two designations that have shown strong growth among private wealth advisors seeking licensing in the last few years. In fact, one new designation is marketed specifically as an up-market version of the CFP.
“The Certified Private Wealth Advisor® (CPWA) designation program is an advanced credential created specifically for wealth managers and advisors who work with high-net-worth clients on the life cycle of wealth: accumulation, preservation, and distribution,” says the website for the Investment Management Consultants Association (IMCA), which licenses CPWAs. “Candidates who earn this designation learn to identify and analyze challenges facing high-net-worth clients and learn to develop specific strategies to minimize taxes, monetize and protect assets, maximize growth, and transfer wealth.”
CPWA is marketed essentially as a CFP for advisors serving high-net-worth individuals. In fact, a prerequisite for being a license CPWA is that you must already be licensed as a CIMA, CIMC, CFA, CFP, ChFC, or CPA.
“As the premier credential in this arena,” says IMCA’s website, “the CPWA designation program offers a challenging educational program focused on advanced wealth management topics, including: behavioral finance, charitable and estate planning, planning for closely held business owners, planning for executives, portfolio management, retirement planning, risk management, and tax planning.
This CPWA credential is a new one. IMCA’s main credential currently is the CIMA. About 80% of its members hold the Certified Investment Management Analyst designation, and 5% are in the process of getting the designation, according to a story I wrote a year ago.
CPWA candidates must complete a pre-study educational component. Part of the $8,000 fee IMCA charges for the CPWA education program pays for reading materials, assignments, and online quizzes for the pre-study program. Much of the fee pays for room, board and tuition for a required five-day in-class program at The University of Chicago Booth School of Business. Renewing your IMCA membership and CPWA license costs $495 a year, plus you need to attend a minimum of 40 hours of IMCA –approved continuing education programming every two years.
Point is, this designation is arguably more in tune with today’s wealth manager, who no longer can earn a living serving “ordinary American,” as the CFP designation once envisioned.
What do you think? Is the CFP designation out step with the needs of financial advisors and today’s market for financial advice?