The CFP Board of Standards is requesting comment on proposed revisions to its continuing education requirement for CFP certification renewal. To its credit, the CFP Board is proposing several changes that are in the interest of consumers, who it serves. But it does not go nearly far enough.
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The proposed changes would:
- Raise the education requirement for renewal of a CFP license from 30 to 40 hours every two years.
- Grant up to four hours of CE credit per renewal period for practice management programs or pro bono delivery of financial planning services.
- Increase the biennial requirement from two hours to four hours for ethics courses.
- Expand professional activities qualifying for CE credit beyond teaching and authorship to include study group and research activities.
- Impose a “cap” of 20 hours of credit biennially on any single topic area, such as estate planning, taxes, or retirement.
- Eliminate CE credit eligibility for completing professional license and designation examinations
- Review online courses for academic credit delivered by regionally accredited colleges or universities as “live” CE programs, rather than “self study.”
- Encourage higher quality of CE program delivery methods
CFPs and others can comment on the proposed revisions before September 30, 2012 by emailing
While the proposed revisions are a step in the right direction, they do not go far enough in a couple of important ways.
Raising the requirement for renewing a CFP license from 30 to 40 hours of CE is insufficient. NAPFA Registered Advisors are required to complete 60 hours of CE every two years. If they can do it, why can’t CFPs? Why would the CFP Board settle for anything less than what is required by a NAPFA advisor? Why would it settle for second best?
The main reason NAPFA has become the leading professional membership group for financial advisors in the U.S. and is given such favorable coverage in the media is that it sets such high standards for its members.
The Chartered Financial Analyst designation is on its way to becoming the leading designation for wealth managers and that’s partly because CFA Institute keeps its pass rate low.
If the CFP Board wants to make consumers respect and value the CFP designation, settling for second best to NAPFA is unwise. With the Web making it easier than ever to deliver CE inexpensively and easily, why can’t the CFP Board do more?
Granting up to four hours of CE credit per renewal period for practice management programs is insufficient.
The CFP business model is in trouble
. CFPs have a difficult time making money on writing financial plans. CFPs often regard a financial plan as a loss leader and earn their money on investment management services. It’s not uncommon to charge nothing or a deeply discounted fee for producing a comprehensive plan for a client. The CFP Board, in proposing to allow a maximum of four of credits for pro bono planning activities or practice management, makes a weak attempt at addressing the problem.
If the CFP Board wants financial planning to be available to more Americans, then practitioners need help in solving the operational challenges that arise in trying to scale the labor-intensive engagement that is financial planning. It should encourage making the delivery of financial planning services easier. The proposed “cap” of 20 hours of credit biennially for any one CE topic — estate planning, retirement, investing, etc. — should also be applied to practice management CE programs. CFPs must be encouraged to learn about technology and operational issues if the CFP Board wants financial planning to flourish.
Sophisticated Web-based financial advice engines are trying to replace CFPs. Unless CFPs get help with business issues, algorithmic advice engines
will take away the advice business from CFPs over the next decade. Pew Internet Research says 68% of those earning $75,000 or more own a smart phone
and people in their 30s and 40s are totally comfortable on the Web. Why not help CFPs better address this serious business issue?
The CFP Board is mostly composed of successful advisors with gray hair. They’ve made their money serving high-net worth individuals in a pre-Internet era of plenty, which now seems like ancient history. Their view of the future is informed by the past and that may be a hindrance. In looking at board’s members, it’s hard to see who among them can credibly represent young practitioners. Who among them has built an Internet advice platform for CFPs? Who among them has built a successful business serving anyone other than high-net-worth individuals?
The Internet over the next decade will propel us into a world where the mass affluent don’t need individual advice and service from CFPs because they will get it from the Web. If the CFP Board is okay with that — if it believes that it would be in a consumer’s best interest for Web advice to supplant CFPs — then it is doing the right thing by not giving practitioners more help with practice management. However, if the CFP Board wants advisors to be able to compete against software-driven financial advice and believes that equipping CFPs to compete in that world is in the best interest of consumers, then it should help advisors figure out how to manage their practices more efficiently.
Instead of merely allowing up to four hours of CE credit for either practice management, the CFP Board should require a minimum of 10 hours for CE on practice management and cap the practice management component at 20 hours biennially.
In fairness to the CFP Board, it means to do well. But the proposal to change CE requirements does not keep pace with speed of change that in recent years has transformed the financial landscape and issues faced by consumers and practitioners.