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Advisor Business
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CFP Board Responds To Questions About NAPFA's Decision To Require CFP For Membership, But Continues To Ignore Questions About Its Consumer Disclosures For CFPs Affiliated With A BD And Acting As Fiduciary |
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Wednesday, January 16, 2013 18:44
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Tags: Advisor businesses | CFP Board | fiduciaries | financial planning | NAPFA Certified Financial Planner Board of Standards Inc. earlier this week responded to questions posed about NAPFA's decision last month to only allow CFP designees to become members.
On December 4, the National Association of Personal Financial Advisors (NAPFA), in a press release, said it would only accept CFP designees as members, asserting it was in the best interest of consumers. However, the move could be seen by other professional designations, such as CFAs, CPA/PFSs, CIMAs, and CPWAs, as a slap in the face. It could also be anti-competitive and not in the best interest of consumers because those other designations are at least as relevant as the CFP in providing consumers with intelligent financial advice. While the other professional designations are not financial planning designations, most CFPs earn their living by providing investment advice, as do CFAs, CPA/PFSs, CIMAs, and CPWAs, arguably making them as important as the CFP in promoting the delivery of financial advice that will be in the best interest of consumers.
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CFP Board, a not for profit organization chartered to "benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning," took longer than a month to respond to the questions, which were emailed to its spokesman December 10, 2012.
While the holidays undoubtedly delayed CFP Board's response, CFP Board's answers are important in clarifying its vision of how to elevate the CFPs to professional status. Moreover, CFP Board has previously ignored questions from Advisors4Advisors about its consumer disclosures for CFP fiduciaries who are affiliated with broker dealers.
In bold below are the questions followed by CFP Board's response.
Regarding the announcement by NAPFA this past Tuesday about allowing only CFPs to become full members in the future. What’s CFP Board ’s stance on this issue?
We are partners with NAPFA. We applaud both them and the Financial Planning Association (FPA) for their CFP® designation-focus. NAPFA has been a strong strategic partner with CFP Board in advocating policies in support of competent and ethical financial planning. NAPFA’s endorsement of the CFP® certification as the standard for financial planning will provide consumers with a clear, strong and unified message.
NAPFA and CFP Board believe that Americans must have access to competent and ethical financial planning services and the CFP® certification continues to be recognized as the standard for the financial planning profession. We value this strong relationship with NAPFA and look forward to working with them in the years to come.
How does the CFP designation compare with other designations for financial advisors, like the CPA/PFS, CFA, CPWA designation?
Consumers need clarity around finding a competent and ethical financial planner. The Certified Financial Planner certification can provide this clarity and assurance to the public that their financial planner is competent and ethical.
In addition to meeting rigorous education, examination and ethical requirements, our more than 67,000 CFP® professionals are required to adhere to a fiduciary standard when delivering financial planning services. At the same time, we are business and compensation model neutral – and our CFP® professionals come from a variety of backgrounds and professions, including insurance, brokerage and investment advisory.
We strongly enforce our own CFP® designation, adhere to a fiduciary standard when providing financial planning services and we encourage regulators to do the same and ensure consumers are informed of what designations are legitimate and which ones are not.
Would CFP Board support an effort by the AICPA, CFA Institute, IMCA, and other professional designation bodies to seek regulation by the Consumer Financial Protection Bureau? Are there any discussions along these lines? If not, why not? Wouldn’t it make sense?
Anyone can call themselves a financial planner. This is why we and our partners in the Financial Planning Coalition are actively seeking regulation of financial planners as a way to protect the public from those who use the term solely for personal financial gain and/or to mislead the public. And with more than 140 financial services certifications and designations on the market, there is great consumer confusion around the ‘alphabet soup’ of designations.
The proliferation of designations is being addressed by the Consumer Financial Protection Bureau (CFPB), which is required to submit to Congress and the SEC recommendations for addressing fraudulent and misleading use of certifications and designations. CFP Board recently made several recommendations to the CFPB to address this issue, including the establishment of a ratings system for senior-oriented financial services designations.
CFP Board, NAPFA and FPA are working together to ensure that the CFP® designation is the standard of excellence for ethical and competent financial planning with CFP® professionals uniquely qualified to tie a person’s entire financial life together.
Is a CFP the best designation for an advisor to get if she intends to manage the financial affairs of ultra-high-net worth individuals with $5 million or more?
CFP® professionals are best prepared to provide comprehensive financial planning to their clients-including those of high or ultra high net worth. The required education and exam prepare a CFP® professional to provide advice across all the areas in which a client, regardless of net worth, would need financial planning assistance. The issues of insurance, estate planning, taxation, investments, along with the synthesis of pulling all of these different areas together with an oral and written communication focus make this an ideal designation to prepare individuals to serve the needs of a diverse population – including high net worth individuals.
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Two RIAs Merge, Creating New Firm With Over $4.3 Billion In Assets Under Management |
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Wednesday, January 09, 2013 13:38
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Consolidation in the RIA industry took another significant step forward with the merger of Argent Financial Group Inc. and Highland Capital Management LLC.
The combined firms manage assets of over $4.3 billion. Highland manages equity and fixed income portfolios for individuals, institutions, and businesses. This Website Is For Financial Professionals Only
Argent will move its six portfolio managers to Highland to handle portfolio management for the combined firms.
Argent was originally called the Trust Company of Louisiana and is located in Ruston, LA.
Highland, located in Memphis, TN, will keep its name and its president, Steve Wishnia, will join Argent’s Board of Directors.
As more firms merge, the importance and effectiveness of the independent RIA industry will grow.
The industry has a unique opportunity to address the needs of the significantly wealthy, offering family offices real competition or aligning RIAs as critical wealth management partners with them. |
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For CFPs To Be Regarded And Regulated As Professionals, Financial Planning Coalition Must Build Bridges, Not Walls; CFP Alignment With CFAs, CPAs, CPWAs Is In Consumers’ Best Interest |
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Tuesday, December 18, 2012 18:32
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Tags: CFA | CFP Board | CPAs | fiduciaries | fiduciary standard | IMCA | NAPFA | profession | RIAs
It is provincial, unrealistic and not in the best of interest of consumers to view the CFP designation as superior to all other professional designations, and NAPFA’s full-embrace of the CFP last week was counterproductive.
Sorry, my friends, but if you want to help advance the profession, then do you really expect people to believe CFPs are superior to CFAs, CPA/PFSs or CIMAs, or CPWAs. The curriculum of all these designations equip a professional with skills to manage wealth in a professional manner. This Website Is For Financial Professionals Only
It was a mistake for NAPFA, which has always set a high standard for excellence in the advisory profession, to declare that it would no longer accept anyone but CFPs as members.
In a story last week, I said the net effect of the change in NAPFA’s membership requirement is to no longer accept the CPA/PFSs as members unless they challenged the CFP exam. I was wrong. It’s bigger than that.
NAPFA has long required members hold a CFP or challenge the CFP exam to qualify as NAPFA-Registered Financial Advisors. Thus, CFAs, CPAs, CPWAs, CIMAs, ChFCs, CLUs, and Ph.Ds in business or economics as well as licensed attorneys and others must challenge the CFP exam to become CFPs to gain NAPFA membership. But is such a policy in the best interest of consumers?
If NAPFA were solely concerned creating a brand that’s differentiated, it would justify making CFP certification a condition of membership. But NAPFA’s concern has always been serving a consumer’s best interest.
Not only is it narrow-minded to think that only CFPs are qualified to be wealth managers, it narrows the market of those qualified to advise on wealth matters, and not in a way that benefits consumers.
NAPFA Registered Advisors are already differentiated by their fiduciary pledge and fee-only status. Those are crucial differentiators that benefit consumers. Adding the CFP requirement is counterproductive.
To gain credibility with the public as a profession, CFPs must be aligned with similar designations, not at odds with them. CPA/PFSs are already considered professionals because they were CPAs before they were financial planners. If you accept that CPAs are professionals, why not embrace their status and join with them?
CFAs are another obvious choice for inclusion in any group promoting professionalism among private wealth advisors, financial planners, and investment advisors. CFA Institute is global, and half of its 100,00 Charterholders are in the U.S. CFA Institute administers the Global Investment Performance Standards (GIPS), a recognized standard-setting body for measuring investment advisor performance. The CFA curriculum provides a comprehensive framework for investment decision making. The three-level CFA exam tests proficiency in ethical and professional standards, fixed-income and equity analysis, alternative and derivative investments, economics, financial reporting standards, portfolio management, and wealth planning. And CFA Institute’s fastest growing membership segment is its private wealth advice section.
This past weekend, while writing a story honoring Sheryl Rowling for her contribution to RIA practice management for designing a more affordable rebalancing tool optimized for tax efficiency, it occurred to me that Rowling is a CPA/PFS designee. Why would a professional membership association for financial advisors erect barriers to her becoming a member?
If you would like to see investment fiduciaries regulated separately and recognized as a profession, a way to make that happen is for CFPs to align with CPAs, CFAs, CIMAs, CPWAs, and others — not exclude them. For CFPs to be regarded as professionals, the NAPFA and Financial Planning Coalition should build bridges, not walls, between CPA/PFSs, CFAs, other credible professional designations. That will best serve the public and the profession.
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Raising Taxes On The Wealthy Is Increasingly The Sticking Point In Fiscal Cliff Negotiations |
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Friday, December 14, 2012 02:42
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Tags: Congress | Economic Outlook | economy
The push to raise taxes on the wealthy is becoming even more of a sticking point in the negotiations around the fiscal cliff issue.
Democrats are refusing to consider another patch for the alternative minimum tax (AMT) to keep it from affecting 28 million more people or any type of cut in Medicare reimbursements unless the Republicans agree to raise taxes on the top 2% of wage earners. This Website Is For Financial Professionals Only
Senate Majority Leader Harry Reid indicated that once the issue of raising tax rates is agreed upon, the doors would swing open much wider on other issues.
The White House and House Speaker John Boehner seem to be at loggerheads in their efforts to find a solution since neither seems to be willing to budge on the tax-hikes-for-the-wealthy issue.
Boehner keeps broadcasting his opinion that the President’s budget proposal is anything but balanced.
At the same time, he did not rule out a possible House vote on extending existing tax laws for couples making under $250,000 per year.
Reid indicated surprise that the Republicans have not been willing to compromise on raising tax rates since the President has indicated he would look at cutting spending once agreement was reached on raising taxes on the wealthy.
A recent poll by the Wall Street Journal and NBC News found that more than three quarters of Americans—including 61% of Republicans—would accept raising taxes on the wealthy to avoid going over the fiscal cliff.
Of approximately 1000 respondents to the survey, there was broad-based support for creating a package that would cause significant discomfort for both sides.
Fewer than three in 10 of those surveyed felt each side should stand ground on the deficit, even if it means going over the cliff. Two-thirds of respondents said the cliff is a serious problem.
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LPL Financial Names New Chief Information Officer |
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Thursday, December 13, 2012 22:22
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Tags: advisor industry people LPL Financial, the nation's largest independent broker-dealer, today announced that Victor Fetter has been appointed chief information officer and managing director of the company's Business Technology Services (BTS) business unit, effective December 17, 2012. This Website Is For Financial Professionals Only
.jpg) Fetter will be based in Charlotte and will report to Mark Casady, LPL Financial chairman and CEO. He will also serve as a member of the firm's Executive Management Committee.
Fetter replaces Chris Feeney, the company's current CIO, who is retiring after five years of service with LPL Financial and more than 30 years in the financial services technology industry.
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