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Roadmap to Profession

recently participated in an online group brainstorming session hosted by the CFP Board.  The goal was to help define the challenges that the profession faces in its effort to become a true profession.  I was encouraged that the focus was on the profession, rather than the glorification or enhancement of the CFP Board itself.  The CFP Board appears to realize that it is one of many contributors to the larger effort to build something like what doctors, lawyers and accountants currently enjoy.  Too often organizations focus more on their own well-being than how they can bring about the desired outcome for the constituents they serve.

To be perfectly honest, I didn’t learn anything new from the time spent in breakout discussion and reporting back to the group for three and a half hours.  But the exercise did remind me that there are two categories of challenge to creating a real profession. 

Category one would include all the elements that are under our control–which, comfortingly, happens to be most of them.  In this bucket, I would put the “evolution of a body of knowledge,” which I think is proceeding nicely.  We (more broadly) can also control the ethical and competency standards for people who hold the certifications—the CFP, and also the CFA, CPA/PFS and, perhaps, others like CIMA.  We have, (very tentatively) under our control, the ability to publicize financial planning as a great career option for students and career-changers.  Other categories on the CFP Board ‘elements of a profession’ list that are mostly under our control: building a viable practitioner community (are you listening FPA?) and building career pipelines within advisory firms.

Which of these are most urgent?  There’s some overlap among what the CFP Board called “diverse workforce” and “talent pipeline,” which together seem to have a high degree of overlap with “public awareness” and “attractive career choice.”  All of them might be addressed directly through a hypothetical initiative which was handed to me by Louis Barajas of Wealth Management Lab back when I wroe the inclusion issue of Inside Information several months ago.  Barajas told me how he had endured grinding poverty as he went back to the community where he grew up to offer financial planning advice to people who had zero assets and generally lived below their means.  Sometimes the fee for his advice was just $25. 

Of course, those community members who took his advice eventually, slowly, became wealthy enough to pay Barajas a reasonable fee—and that’s exactly the point.  I can envision a program where the CFP Board would subsidize or incubate small individual planning practices in underserved communities until these practices have become viable ten years down the road.  There might be a sliding scale: this much support in the first year, a bit less in the second, a bit less in the third and so forth until the firm was expected to pay all its own bills by year ten.

Over time, those little incubating firms would expose thousands of Americans to the financial planning career, and also the value of advice offered by financial planners.  As Black and Brown Americans saw financial planners first-hand working to build wealth in their communities, they would be attracted to the career, and in a decade, perhaps less, we would see our lily-white profession start to reflect the demographics of the American population.  Yes, that’s a slow process, but if we’re looking over the history of the profession, ten years is not too long to achieve something so important.

This would also address another item on the list of 15 elements, what the CFP Board called “consumer access.”  The solution to serving the unwealthy, as currently formulated, is envisioned as a large number of pro bono efforts to serve people who don’t meet the minimums of the local wealth managers.  Wouldn’t it be better to create sustainable for-profit solutions rather than have advisors donating a bit of their time as charity for the unwealthy?

That brings us to the elements on the 15-point list that belong in bucket number two: the things that are not under our control.  This list is surprisingly short, but the elements on it are so intractable that I groan as I write about them. 

Into this bucket I would put what the CFP Board calls “regulatory acknowledgement,” which, if you parse through a lot of confusing language, basically means that financial planning would be recognized by state or federal regulators as a profession, where professionals would be required to have certain educational credentials, hold certain designations, and adhere to strong government regulations rather than the necessarily weaker enforcement powers of the CFP Board. 

The CFP Board could become an SRO of this profession, or it could ask that the state or federal government adopt its ethical and professional standards.  But the goal isn’t about the CFP Board, per se; it’s about how to prevent just about anybody from hanging out a shingle and calling him/herself a financial planner. 

I see a great deal of overlap here with “public interest advocacy,” which basically means lobbying on behalf of consumers, which also (by a nice harmony with the fiduciary standard) means lobbying on behalf of professionals who would put the interests of consumers ahead of their own.  Thus, lobbying for a government-protected profession that would eliminate salespeople and asset gatherers would serve both “public interest advocacy” and “regulatory acknowledgement.”  The former is a bit broader, and would also cover things like lobbying for the now-(alas)-defunct DOL Rule, and against the now-(alas)-still-with-us SEC Reg BI.  I would wrap “regulatory acknowledgement” inside “public interest advocacy” as a single item on the list.

The brainstorming session pointed out what we all know: that there are intractable, well-funded foes who will fight any effort to distinguish real professionals from asset-gatherers and insurance salespeople who so effectively wear the guise of a real planning professionals.  Those sales institutions have a lot more money to spend on lobbying than we do, and it appears that the size of the brokerage and insurance firms carries a great deal of weight with the regulators.  We’re dependent on Congress, state legislatures and government regulators to do the right thing and put consumers’ interests first, and somehow that consistently seems to be the losing side of the debate.  Not under our control at all.

The other big item in this “we don’t control” bucket is what the CFP Board termed “respected baccalaureate programs.”  Basically, that means having more and better programs at established universities that teach financial planning and confer a degree in financial planning.  There are currently more than 120 of these programs, but the real problem is that they exhibit almost no consistency.  At different universities, the planning professors’ program might be housed in the agriculture department, the department of human sciences, in finance, accounting or economics.  A student whose curriculum emphasizes financial planning might get a BS in finance and receive a certificate in financial planning on the side, or a finance degree with an emphasis in financial planning or something other than what we really want: a BA or BS with a major in financial planning.  (We can’t even agree on whether financial planning is an arts or a science degree.)

This is an even more intractable issue than the regulatory one, because colleges evolve at a pace that makes glaciers look speedy.  My solution would take a pretty big suitcase full of cash: pay for the construction of a building that would house the very first financial planning department at a recognized university, and then create an endowment that would pay the staff salaries.  I would guess that this would be most effective at a traditionally-Black university (see “diversity,” above), but the point is that this department would become a model for other educational institutions to follow—five to ten decades from now.

In all, the CFP Board’s initial exercise (there was a pre-Covid in-person brainstorming session last year in Chicago) has identified 15 elements of building a profession, and I think I mentioned most of them.  I think, if I were involved in the organization of this process, I would have resisted the temptation to create a neat, even number of elements (three groups of five), and combined things like consumer access, attractive career choice, diverse workforce and talent pipeline into one broader category. 

I might have emphasized a bit less the areas where things seem to be humming along nicely (ethical standards, standard enforcement, body of knowledge, established career path), and focused on the biggest challenges.  I might have spent most of the time brainstorming these challenges that we don’t seem to be addressing effectively.

But for the most part, the CFP Board is embarking on a worthy effort, and I’m looking forward to the unveiling of the final roadmap to get to that place where we have a real profession—however many years or decades that might take.