Is the ICFP's agenda winning?

Nobody ever said merging two organizations was easy. And in almost every merger there is a winner and a loser, even if it sometimes takes years to determine who won and who lost. In the case of the merger between the International Association For Financial Planning and the Institute of Certified Financial Planners that created the Financial Planning Association in January 2000, it appeared early on that the larger, financially stronger IAFP would emerge in the driver's seat. When ICFP executive director David Brand stepped down as co-executive director just a few months after the merger was consummated, leaving IAFP executive director Janet McCallen alone in the top slot, it only served to confirm those suspicions.

But as time goes by, many think that the agenda of the planner-centric ICFP is emerging as the overarching agenda. That became clear this past September when the FPA asked its broker-dealer division, which was created by the IAFP in 1987, to leave the organization and form their own association, although they were invited to remain as corporate members. Some brokerage executives had considered initiating such a move on their own for several years, and a task force had been grappling with the issue for almost a year. But the FPA's portrayal of the break-up to its members and the media in mid-September as a mutual decision was also somewhat misleading. According to participants, FPA President David Yeske presented the decision as a fait accompli and said that it "was born of integrity."

In retrospect, there probably wasn't a diplomatic way to say it. Some brokerage executives interpreted that phrase to imply that their own integrity was subject to question, though Yeske, an eminently decent person, undoubtedly meant otherwise. Still, some wounds remain. "They told us to leave; they jilted us," says one participant.

While many independent broker-dealers may opt to become corporate members, some are weighing all their alternatives. "If I'm too mercenary to be a broker-dealer member, wouldn't I also be too mercenary as a corporate member?" one brokerage executive asks.

Some brokerage executives are resigned to the decision. "It was inevitable," says Art Grant, president of Cadaret, Grant & Co., a Syracuse, N.Y.-based brokerage. "In deciding to concentrate on the CFP community, the FPA has determined their future and it's consistent with that future. And I consider Dave Yeske a friend."

Yet Grant, who worked hard to establish an IAFP chapter in New York two decades ago, also admits to melancholy feelings about the outcome. Among broker-dealer executives, he's hardly alone. In the 1990-91 recession, as struggling planners left the business by the thousands, the old IAFP's broker-dealer division provided a good measure of the glue that held the fragile planning community together.

Today's reality is, of course, quite complicated. Financial planning now is an emerging profession that has survived a violent bear market and an extended economic slowdown in remarkably good condition. Advisors may have watched their hair turn gray in recent years, but they have unquestionably gained market share. Many practitioners have businesses that are healthier than the brokerages and financial services companies that helped underwrite much of the profession's early growth.

On the surface, the FPA has weathered the economic turmoil of the past three years with barely a scratch. It still has roughly the same 29,000 members that it did in 2000. That's a sharp contrast to the last recession of the early 1990s when the ICFP and especially the IAFP suffered sharp membership declines.

In mid-October, several brokerage executives met in Chicago to form the new spin-off broker-dealer organization, which will be headed by FPA Associate Executive Director Dale Brown. But the question remains whether that organization will be a broker-dealer-only group, or whether it will have a practitioner division to complement the broker-dealer division and potentially compete with the FPA. A few broker-dealers say that's still an option, although it appears to have caught the FPA leadership off guard. "I don't see that happening," Yeske says.

Others see it differently. Todd Robinson, chairman of LPL Financial Services, the nation's largest independent brokerage, probably will join the new broker-dealer organization that will come out of the FPA. But he says his firm is in "active talks" to establish yet another organization that could represent both brokerages and their reps. Robinson, who spent five years as chairman of NASDR, has one overriding reason to start another organization. "We're not sure the government understands the independent contractor model and this would be a way to create communication with all regulatory groups," he explains.