Creating such an organization is actually something Robinson wanted to do for several years but chose not to, out of a desire not to offend the FPA. The FPA's decision to part ways with its broker-dealer division creates a window of opportunity that simply didn't exist before. "This industry isn't in conflict," Robinson says. But different groups have "different goals, agendas and needs. For a while it was hard to get clarity."
Such a new organization could give "fee-and-commission planners a stronger voice," Robinson adds. "Getting rid of overlap is good for everyone."
Yeske sees those same fee-and-commission planners, most of whom transact business through broker-dealers rather than custodians, as a core constituency of the FPA. "The FPA has an evolving understanding of our organization, identity and purpose, and that makes it easier to make decisions," he explains. "We are for and about financial planning and we're the only ones claiming the big territory of financial planning. The FPA is not going to be about the financial services industry; it's going to be about financial planning. A lot of financial planning is taking place in the broker-dealer environment and we'd like to [be there]. This change only affects 110 broker-dealers, not individual members."
Some broker-dealers agree with Yeske that it made sense for brokerages to form their own advocacy/lobbying organization at the federal and state level. "With its carefully focused emphasis on promoting the financial planning process and CFPs, I do not believe the FPA could afford to spend the resources the broker-dealers feel are essential for advocacy on issues important to them," says John Dixon, who heads the Pacific Life network of broker-dealers. "I believe the FPA board was prescient in recognizing the growing sense among broker-dealers that they did not fit in the mix as well now as they used to. If I were on the FPA board I would have supported the separation."
As regulatory upheaval erupts in the nation's Capitol and sweeps across the states in the wake of unprecedented financial scandals, the need for advocacy for all players in the financial services business has increased exponentially and the interests of brokerages and practitioners have diverged on issues like who is a fiduciary. This became apparent following a Securities and Exchange Commission proposal to exempt reps at certain brokerages from RIA registration, a move that outraged many independent RIAs. Another suggestion last February by outgoing SEC Chairman Harvey Pitt, that regulation of RIAs be transferred from the SEC to the National Association Of Securities Dealers, elicited a similar reaction.
To understand where the new association is headed, it's useful to study how its predecessors got here from there. When the financial planning movement was starting to catch fire in the 1970s, the IAFP quickly became the cottage industry's largest association by structuring itself as an "open forum" where allied professionals interested in the movement could meet. Planners, brokers, attorneys, accountants and financial services executives could meet in one umbrella organization and share ideas about creating a profession out of a cottage industry. This "come one, come all" philosophy rapidly gained momentum in the 1980s, though it also attracted some dubious promoters of tax shelters and other high-commission financial products that left investors holding the bag.
On the other hand, the ICFP was built around the notion of its founder, P. Kemp Fain, of creating one profession with one designation. At this time the CFP mark was little more than a mail-order designation, so the ICFP gained traction slowly. If the IAFP's open forum concept was too loosely regulated for some, the ICFP's singular focus on advancing the mark and the profession struck some as narrow and constricting. Some advisors who belonged to both associations spoke of getting a feeling of "in-breeding" at ICFP meetings, which included too many nice, well-meaning small practitioners focused on small-picture issues.
But during the 1990s, the financial advice business did start to emerge as a real profession and the number of CFP licensees began to grow significantly. If anything, that growth has accelerated during the anemic economy of the new millennium. And with more universities introducing the CFP curriculum, the pipeline of new CFPs is stronger than it ever was.
A higher level of professionalism became the hallmark of both organizations in the 1990s, after a first attempt to merge in the late 1980s ended in acrimonious failure. After the CFP Board of Standards raised the level of difficulty for the CFP exam early in the decade, obtaining the designation became a serious challenge.
Gradually, the differences between the two associations receded as both engaged in a healthy and friendly competition to provide members with continuing education and networking opportunities. Among both memberships, there was a slow but inexorable shift away from commission-based planning towards the fee-based or fee-only models that mirrored changes occurring in the profession at large.