The late Harold Gourges, CFP, was one of my early heroes. Among his many insights into financial planning, he advocated role clarity. He observed that the financial services world required and supported three separate functions: advice, products and sales. He counseled that we should make every effort to keep these functions separate or at least distinct. He suggested this would be our best approach for keeping matters clean and unconfused. One of my favorite quotes from a speech he gave in 1984 was, "When your surgeon does your physical, you end up with a lot of scars."
Historically, the function conflict is the tension between advice and sales. This has been placed squarely on our backs as a conflict-of-interest issue. Those both advising and selling have been challenged with some tough questions: How can you serve two masters? Which hat are you wearing? When are you wearing it? What is the difference between client and customer? What are the implications of the distinction?
The problem is as old as dirt; the bickering has lasted well over 20 years. Though the resolution is imperfect, we seem to have effectively resolved the issue with our profession's embrace of fiduciary status and obligation. Fully accepting our duties to put our clients' interests ahead of our own, we have declared the client's interests to be paramount. In the process, we make ourselves accountable to our clients at the highest level possible.
Unfortunately, the advice/sales conundrum has taken another twist. Worse, it is no longer an intra-profession struggle but a direct conflict between industry and profession. Industry is increasingly aggressive in its attempts to position itself in an advisory capacity. More and more often, it portrays itself as the financial planner-not as the maker and purveyor of financial product. No longer is industry content to be a trustworthy and reliable source of financial product but it also claims advisory turf as well.
Make no mistake, our profession's interests are not aligned with industry's concerns. We want to build an authentic profession that occupies a legitimate seat alongside other authentic professions. Industry seeks commercial success through quality products and functional services. Nothing wrong with that, so long as it does not claim to do what our authentic profession does.
We must protest industry's attempts to encroach on our profession's turf. Creating confusion between an authentic profession and private product manufacturers baffles, confuses and misleads the public. It furthers distrust and inaction and encourages the continued misunderstanding of good money habits. It is inappropriate. Accordingly, the CFP world ought to step up and claim its own-not just for its own self-interests but also for the integrity of the financial planning profession and for the public good.
As the court pronounced in the case Financial Planning Association v. SEC, financial institutions are simply not the same as advisors. We have separate, distinct and disparate duties, capacities and interests. While we ought to have close relationships to industry, we ought not to be confused with it. Our intrinsic loyalties are to the profession and to each other, not to the financial services industry.
Advisors cannot escape being in relation to industry. Our clients need what it makes. Moreover, industry employs and supports us in some forms of our work. This is where our functions intersect. We need to give our clients access to financial product; industry needs to sell it to them. Financial product is simultaneously a sales portal and a necessary aspect of our client service. However, industry ought to promote us, not confuse our clients, just as pharmaceutical companies promote physicians: Don't the ads always end with "Ask your doctor"? Industry sells; advisors serve. It is all in the attitude.
Some actions can only be taken by individuals. These are the ones that require a knowledgeable person's brains, judgment, wisdom and perspective. Individuals advise. Individuals plan. In stark contrast, institutions neither advise nor plan except through individuals. No branding campaign should suggest otherwise.
The companies in financial services are not human beings. They are industry. They can only act as industry acts. They are non-human entities. They may have legal status but possess no other human qualities. They are outside the class of those who can actively advise or plan. They cannot become CFP licensees.
Granted, these observations have high "duh" factors. Yet, their implications are not so banal. If we let industry claim to be us with impunity, then who are we? Are we still merely extensions of industry? Is financial planning still simply a great product delivery system? Are we engaged in building an extraordinary, authentic profession? If we are an authentic personal service profession, we must brand our unique selling proposition; we must tell people who we are-and who we are not.
Unfortunately, industry keeps telling the world that it is these institutions that are doing the listening, caring and understanding. They attempt to brand industry as "advisor" and "planner." It is not true.
The copywriter's craft notwithstanding, institutions cannot have a "one on one" relationship with anybody. As a practical matter, you cannot "talk to Chuck," not really. While I hear Mr. Schwab is a fine fellow, he is not the advisor here. Charles Schwab, the mega-financial institution, does an excellent job of providing various services, but it is not an advisor. "Chuck" does not refer to Mr. Schwab, the human, but to the successful company that bears his name. The "Chuck" role is being served by cadres of individual professionals. Unfortunately, they are not the ones being branded. "Chuck" may employ such people or have functional relationships with them. They ain't "Chuck."
Though Messrs. Smith and Barney were once flesh and blood, just like Messrs. Merrill and Lynch, Price, Waterhouse, Morgan, Stanley, et al, their names have long since morphed into brick and mortar. Their humanity is but a distant memory.
Others started off with institutional names or changed them a while back. No matter. They are all industry. "Fidelity," "Lincoln," "Vanguard" and "the Principal" cannot have a chat with you or shake your hand. None of the three-lettered acronyms- "ING," "AIG," "UBS" or their ilk-can talk about life's important issues. Dennis Hopper notwithstanding, Ameriprise cannot dream out loud along with you about storming into your sixties.
Industry makes, promotes and sells. It does not have authentic relationships and it never, ever laughs or cries. It does not advise or plan any more than hospitals serve as doctors or practice medicine. People do the doing.
This is a critical point. As competent business people, we all know that the one with the relationship wins. This is what we all want. This is value. This is the basis of practice valuations. We cannot give relationships away. I suggest that, ultimately, our equity, the practitioner's authentic wealth, is in the brand known as the financial planning profession and in our one-on-one relationships. This is the wealth that we carry with us independent of industry interests. Our wealth is not in the brands of our employers or securities supermarkets. Industry may envy our client relationships. It is still not us. It does not have that equity. We ought not to let it pretend otherwise without strong resistance.
This has some serious implications and challenges. Among them, it is time to claim our turf. We need to earn it, define it and plant new seeds in it. As much as industry might wish it otherwise, we are much more than industry's salesmen or its premier product-delivery systems. We are now fully emerged as a new, authentic profession with our own distinct imperatives and standards.
We ought not to quietly tolerate the confusion industry generates trying to be us. Recognizing that our interests are not aligned with theirs, as professionals we must become our own advocates. These interests ought to be defined with respect to the profession's practitioners and separated from those of industry.
Finally, it means we take responsibility for establishing our own standards and branding in service to the public's interests. This may mean cleaning up the confusion, defining our roles and helping the public make intelligent and informed decisions about who to hire based on specialized skills and learning within our profession-and not based on commercial brands generated by industry. This would include discrete specialties based on particular skill sets-not just based on the names of employers or even on a particular school of training.
The proliferation of professional marks is a problem. At last count there were 80 some sets of initials polluting our business cards. Who could possibly keep them straight or understand which has value? Yet, if a set of initials does not communicate something special, what is the point? Unfortunately, most of them merit Shakespeare's damning observation from Macbeth as being full of sound and fury, signifying nothing. Baffling, mysterious acronyms help no one. Are we so testosterone deprived that we need to claim six or seven sets of obscure symbols as accomplishments?
Let's face it, the Cracker Jack-box approach just makes us all look like clowns or quacks even as it adds to public confusion and bewilderment. Meaningful to meaningless, even hard-earned licenses and certifications generate unfortunate confusion and misunderstanding. Frankly, I suspect we would all be better off if we abandoned all initials other than our beloved "CFP®" marks and CFP Board-approved certifications.
Medicine has board certifications. Law has some specialty marks. Neither group of professionals generally clutters its stationery or business cards with other extraneous information. Their specialists have gotten together to establish the uniform training and criteria for particular specialties and privileges. It may well be that financial planning would benefit from a similar approach.
This probably means we need to be about the business of identifying and developing some specialty aspects of financial planning. We especially need something addressing interior skills and training. We might possibly denote miscellaneous specialty subsets for such major and complex transitions as divorce, "sudden money," career change, options exercise, retirement, aging and dying.
Right now, the elephant in the living room is "life planning." Good people with excellent motives run several quality programs. These are my very good friends and some of the finest folks on the planet. Nonetheless, in my opinion, they hurt their cause, their case and their markets when they compete against each other by asserting random designations. I suggest that a better approach would promote their programs while serving common cause, in a name such as "CFP Board Certified Life Planner." They, and we, would be better served by their combined efforts to commonly define minimum skills, necessary education and appropriate standards of care.
Reasonable people ought to be able to agree on common elements of required training. A quality life planning brand would provide protection to the public, enable accountability and establish minimal levels of competency, education and training. Like-minded folks could develop meaningful ethics while requiring appropriate levels of continuing education and experience. Moreover, this would enable thoughtful identification of appropriate skill sets, content and other elements that should be used in "life planning" engagements. Perhaps, like mental health professionals, they would even commit to some sort of ongoing supervision.
It would be worthwhile to explore these.
In sum, we ought to resist industry's well-moneyed attempts to brand the advisory territory as its own. It is ours. Then we should look at our own branding issues, such as the fundamental clarity of financial marks and other problems inherent in their proliferation.
The nature and identity of the financial planning profession is ours to claim. However, it will be taken from us if we are not careful. It is time for financial planners to combat confusion and claim the turf as our own.
Richard B. Wagner, JD, CFP, is the principal of WorthLiving LLC, based in Denver. He is the 2003 recipient of the Financial Planning Association's P. Kemp Fain Jr. Award, which recognizes a member who has made outstanding contributions to the profession.