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

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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.  



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