As of 2010, all new members who join the National Association of Personal Financial Advisors will have to hold the certified financial planner designation. While a small sampling of members don't have any problems with that, others think the move will preclude a valuable subset of the advisory profession.
NAPFA's decision was reached without fanfare this autumn. "We had it in the minutes from our board meeting, and it wasn't released in a way we would've wanted it," says Ellen Turf, executive director of the the Arlington Heights, Ill.-based organization that represents more than 2,000 fee-only planners. "A member saw it in the minutes and called me."
Turf says reaction to the move has been relatively quiet subsequent to NAPFA's announcement of it to its members last month. She notes that 86% of the group's members already are CFP certificants, and current members who don't have it won't be required to get CFP certified. The change applies only to new members as of January 1, 2010.
"What consumers know is the CFP designation," Turf says. "With all of those alphabet soup designations out there, we feel we should help pull together the profession and what consumers should be looking for, and we felt the time was right to do this. Over the years the impact of those other designations have become less meaningful."
NAPFA member Mark Goetz, owner of A Narrow Road LLC in Adrian, Mich., currently holds the charted financial consultant (ChFC) and chartered life underwriter (CLU) designations. He says he's currently studying to be CFP certified because it's required by the Alliance of Cambridge Advisors, an advisor network he recently joined. He plans to take the CFP next summer. "When I get the CFP I might just let the others go and not maintain them," he says.
Steven Podnos, a CFP certificant in Merritt Island, Fla., says requiring NAPFA members to hold the CFP designation should be the "absolute minimum" requirement. "I come from the medical profession which has very rigid licensing requirements," says the former full-time doctor. "I think this profession needs minimum certification standards, and CFP is the bare minimum.
"It's not the end-all, though," he adds. "I think the industry needs to develop higher levels of education and certification, along with some level of board exams so the public knows financial advisors have a certain level of certification standards."
Kipley Lytel, founding partner of Montecito Capital Management in Santa Barbara, Calif., is a chartered financial analyst (CFA) certificant who doesn't like NAPFA's new CFP emphasis. "CFP guys are smart, but CFAs have money management backgrounds, are chief investment officers and are running the strategies," he says. "Removing that from NAPFA would limit its scope. If that's the direction they're going, then I don't need to be on that ship."