Most Advisors Favor CFP Board’s Proposal To Grant CE for Practice Management Hot

Other Organizations Grant CE For Practice Management

In proposing these changes, the CFP Board would be joining other financial planning/advisor organizations that oversee CE requirements, including the Investment Management Consultants Association, which grants CE credit for practice management content per renewal period.

In the case of IMCA’s designations, the CIMA and CIMC, non-technical topics that may be accepted for continuing education credit include Building Your Business (if related to investment or wealth management) and Leadership Programs (if related to investment or wealth management).

According to National Association of State Boards of Accountancy’s Learning Market, “Certified Public Accountants (CPAs) must adhere to the continuing education requirements set forth by the State Board of Accountancy of the state/s where a CPA license is held. The requirements for continuing professional education vary from state to state. The American Institute of CPAs (AICPA) requires certain CPE for maintaining membership.” State Board’s do grant CE for practice management content, though it’s limited.

According to Judith Neil, who is the director of PACE at the American College and whose job it is to make sure its graduates are in CE credit compliance, if the topic relates to the management of areas covered by the subject matter included in American College educational programs and the management of people who work in financial services, practice management courses are acceptable for PACE credits.

Still, in proposing these changes, the CFP Board is moving away from what other organizations, such as the CFA Institute, are doing with regard to practice management and CE. “At CFA Institute we do not award CE for marketing and promotion topics nor for topics related to software systems and other operational topics related to firm management,” said Stephen Horan, Ph.D., CFA, CIPM who heads University Relations and Private Wealth for the CFA Institute.  “We offer CE for developing skills beyond those covered by the CFA program, such as leadership, communication, personnel management, and client relationship skills.  Our fundamental principle for determining what qualifies for CE is whether it builds a skill rather than being operational.”

Here’s a glimpse of what advisors are saying in reaction to the CFP Board’s proposal.

Not in favor

Slightly less than half of the advisors who responded to my email inquiry are not in favor of the CFP Board granting CE for practice management content. “I’m not in favor of it,” says Bill Garrett, CFP of Garrett Financial. “The 30-hour biennial requirement is not difficult to achieve. I feel consumers should regard our CE requirements as keeping our planning skills up to par and not our business skills.”

And Dick Wagner, JD, CFP of WorthLiving LLC gives it a thumbs down saying CE is more aimed at keeping advisors current with regard to technical content. “I have always believed that the 1040 trumps the CE in terms of attraction but not for CFP credit,” he says. “Which is to say that CE ought to pertain to your professional creds but not your abilities to stay in business profitably. Honestly, that is not CFP Board's problem.”

Others take a similar stand. “I have to admit I’m not a supporter for practice management for CE,” said Michael Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL and publisher of the The Kitces Report. “Someone who owns their own financial planning practice should be capable of making the personal investment of one hour of practice management content every six months simply for the sake of his/her own practice, regardless of whether it is eligible for CE,” Kitces wrote on his blog last week. “And given that the fundamental purpose of Continuing Education is to maintain one's technical competence and skillset, I fail to see the relevance of practice management content as continuing education for a professional certification. In fact, this new rule arguably creates an odd double-standard for practitioners; those who decide to own their businesses can get four hours of CE credit for practice management and only require an additional 36 hours of other credit, while those who are employees in a practice are expected to get all 40 hours from traditional CE content (given that most practice management content has little relevance for the huge number of planners who don't own or control their practice in the first place). Why can't investing time and effort in good practice management content be its own reward for someone who chooses to own his/her own business?”

In favor

More than half of the advisors who responded to my inquiry, however, are in favor of the CFP Board’s proposal. Giving CE for practice management is, they say, necessary if only for this reason: If advisors don’t acquire the knowledge to run a financial planning business, they likely won’t be in business to provide financial planning services.

“I'm in favor of a limited amount of practice management CE credit,” said Tom Duffy, CFP, a principal with Jersey Shore Financial Advisors. “Advisors need training on how to run their businesses efficiently and effectively. We have a duty to stay in business to continue to serve our clients. Being proficient in business management practices makes good business sense.”

What’s more, Duffy says requiring a certain amount of training in this area makes sense, especially considering how many career changers and recent college grads are entering. “From a compliance standpoint -- policies, procedures, checklists, work flows all contribute to a successful client engagement -- successful for both client and advisor.”

Others say offering CE for practice management will help planners become more effective. Eric Toya, CFP of Trovena is in favor of practice management CE, too.  “A significant amount of time that we spend working for our clients is not face-to-face, but behind the scenes,” he says.  “Becoming more effective and more efficient in the areas of practice management will only strengthen our ability to serve our clients well.”

Carl Richards, CFP, of Prasada Capital Management and BehaviorGap.com, agrees: I do think that CFP's can only serve clients if they are still in business and therefore practice management is a very important issue for the CPF and the public.”

Another advisor who had a chance to see the problems that CFPs have firsthand also says CE for practice management can go a long way toward helping advisors stay in business. In my opinion, there are a whole lot of issues surrounding practice management that are critical to effective compliance,” says Chuck Robinson, CFP, who formerly chaired the Appeals Committee of the CFP Board.

In that role, he frequently heard appeals on cases where the CFP practitioner had gotten into trouble because they quite frankly did not understand how to structure and manage their practice. “They had not put in place the automatic procedures and practices that would have protected them and their clients,” says Robinson.

Jim Barnash, CFP, joins the chorus as well. "Like any profession you need to stay in business to be able to help your clients or customers," he says.. "Marketing, general business skills, being a manager of others, all of these are necessary to run a successful business. These items are not natural for most people and financial advisors are no different. However, these skills can be learned and developed and help make stronger practices which become capable of being a business at some point." 

And still others say the CFP Board’s proposal is long overdue and necessary. “In fact, to help CFP Board truly deliver on their mission to protect the public, CFP Board should be actively growing the number of CFP® professionals each year, says Joseph Gillice, CPA, CFP and president of Dalton Education. “To that extent, practice management is an important component to any successful practice, especially for young planners entering the profession.”

Gillice also says the CFP Board might go one step further and require Board-registered education providers to include practice management as part of the required education curriculum. “This would assist new planners entering the industry to learn how to position, market and sell their services, write a business plan, implement technology and supervise and manage a practice,” Gillice says.

While having strong technical competency is an important component to a successful financial planning business, Gillice is quick to note that practice management is essential to building an “enduring” practice. “The more successful advisors we have practicing, the better the public is served and the more likely the Board is to fulfill their mission,” he says. “Until we have practice management as a required component to the education requirement, accepting practice management for CE credit is a good start.”

Other planners agree that it’s long overdue and changing the overall requirement to 40 from the current 30 doesn’t dilute the CE requirements. “Being a successful planner includes helping clients to the best of our ability,” says Scott Kahan, CFP, president and wealth manager at Financial Asset Management Corp. “But we need to be successful in running our practices so that we can be there to assist our clients.

What’s more, Kahan says there’s an additional benefit to granting CE for practice management that some might be overlooking. “Many of the practice management topics for planners are transferable and will provide ideas allowing us to assist our small business clients,” he says.

For his part, Caleb Brown, MBA, CFP a partner with New Planner Recruiting thinks it’s a good idea, but favors placing – as the CFP Board has proposed – limitations on the amount that would qualify per renewal period. I think the four hours per renewal cycle that would qualify is reasonable,” Brown says. “I believe there is a lot more to being a great financial planner practitioner than solely technical knowledge and improving a business, through what others may consider ancillary topics, ultimately, I think, can enhance the client experience and quality of advice. CPAs can receive CPE for practice management so I don’t think this idea is too farfetched.”

Of two minds

Some advisors, meanwhile, are having trouble deciding whether they are for or against the CFP Board’s proposal. “I’d say I’m torn,” says Chip Workman, CFP of The Asset Advisory Group.

On one hand, Workman views CE as something that should meaningfully and directly impact my planning skills in the areas of investment management, estate planning, insurance, tax mitigation and the like. “While practice management education can be extremely valuable, it really falls into the category of helping our firm strengthen its ability to operate and serve as opposed to directly boosting my knowledge and capabilities as a CFP,” Workman says.

Like many other advisors, Workman says he has sat in some incredibly worthwhile practice management sessions that have “helped us better run our practice and, as a result, provide a better planning and service experience to our clients.” But whether those kinds of session that should qualify as continuing education as a financial planner really comes down to a case-by-case basis, he says.

Your opinion?

What do you think of the CFP Board’s proposal to grant CE for practice management? Let us know below in the comment section.

This Website Is For Financial Professionals Only