“Well, ya got trouble, my friend, right here …”
—Meredith Wilson, The Music Man

Folks, the financial planning profession has trouble. Of course, there is always more than one fly in the ointment, but there is one that is particularly nagging and nasty that deserves our immediate attention. It is the way the financial services industry constantly engages in overt identity theft and the unceasing assault on the structural integrity and individualism of the financial planning profession.

What? say you. You mean our friends? Our bosses? Our partners? You mean to suggest that there is actually a distinction between industry and the financial planning profession? Don’t we all have the same interests? Aren’t we all on the same side?

Yes, Virginia, there is a difference. And no, we are not.

Unfortunately, we can’t really blame the financial services industry; it is doing what comes naturally. It gave us life, after all. Like many parents, it thinks this fact gives it some claim over us beyond goodwill. This fruit hangs low, and extraordinary temptations beckon. But my post-FPA v. SEC decision mantra remains true and cautionary: “They are not us. We are not them.”

Oh, indeed, we are of industry. Our roots are there. It has provided context, companionship and compensation. We mostly like it. Most importantly, we need it to faithfully serve our clients’ needs. But that does not entitle it to the deed to our profession. We violate our code of ethics and our very purpose for being when we place our loyalties to industry above loyalties to either our profession or our clients.

Stand And Be Counted
This is not to chastise the industry so much as it is to ask financial planners to grow up and demand what ought to be seen as rightfully ours.
We are not the same as the companies that manufacture financial products. We need those financial products, and we need to use those financial products still. But we serve the clients first and foremost. We are not the same as those who sell those products as their primary function.

We are not product manufacturers. That is industry’s job. Nor are we mere financial products salesmen. That’s also industry’s problem—not ours.

We have other, more important duties. Sometimes sales are appropriate, no quarrel. Sometimes they are not. Members of an authentic profession should be serving their clients, not a production schedule. When we fail to understand this, we disserve ourselves, our clients and our various stakeholders, including the financial services industry. There are substantial differences between a financial planner and these faceless corporations.

To name just a few of these differences:
The financial services industry is not a human; it works with many people at a time. Financial planners are human; we work with small numbers, one or a few people at a time. Regardless of what industry tells you in its incessant claims that it does our job, it cannot engage in human activities. It can and does manufacture great products that serve consumers and assist them with their financial stability. However, it does not provide advice. It needs humans to do that.

Industry cannot listen. Industry cannot provide full-spectrum, custom responses to individual issues. It cannot tell when it is boring someone to tears or touching a nerve. Industry cannot use its aggregate wisdom or its personal life experiences to help guide clients through some sort of pickle or prepare them for some great opportunity. Indeed, industry cannot prioritize or do particularly good thinking outside the need to sell financial products.

Industry never took a test to prove its competency. Nor has it taken an oath committing itself to a code of ethics and professional responsibility.

Industry is not devoted to the notion that its “advisors” should have suitable experience to meet appropriate standards for professional education either for its initial qualifications or for its continuing education. Most importantly, industry cannot have personal relationships with folks one to one.

To put a cherry on this point, I need only take you as far as a relatively new television show, Almost Human. A mere 30 years into the future, when the show is set, scientists have concocted and manufactured androids capable of mechanistically performing human acts in a humanoid frame but without personality or soul. The limitations of these soulless androids sans personalities are set in stark contrast to the powers of the manufactured fellow given the “soul chip.” You would not want your financial advice from him. Money’s nuances and life’s demands would elude him, though he would be infinitely preferable to his soulless brethren and would no doubt thoroughly understand collateralized debt obligations.

You would think all of this would be intuitively obvious to industry. After all, even the pharmaceutical companies tell you to consult your doctor in their televised pitches. While major hospitals and health services networks extol their personal virtues in terms of rankings, success ratios, patient satisfaction, and the like, they make it clear that the docs deserve credit as individual experts. They most particularly do not suggest that the institution is practicing medicine.

Even the lawyers figured this one out. When law firms advertise, they always use real practitioners. They know you want your advice from an authentic lawyer, not just an actor playing one on television.

Not so in our world. Here, we tolerate countless companies pretending they are us. This is a huge problem because it is utterly, completely and devastatingly confusing. The CFP Board demonstrates excellent humor in its television ad putting a dreadlocks-wearing DJ in a suit, pitching to potential clients and gaining their trust.

They Are Not Us
Let’s drill down a little bit. Anybody who watches television even a little knows that there are countless companies regularly advertising their financial planning “expertise.” The message these companies deliver time after time after time is quite simple: They are the ones that understand the individual. They grasp long-term goals. They know how to help the individual stick to the version of the planning process that they developed with him or her “together.” Come to them; stick with them. Millions of others have. Do this and you will have a long and happy life.

Their promises are impressive. Doing things their way, you can access legions of folks who are experts at all manner of cool stuff from asset allocation plans to estate plans and appropriate insurance products. Their money managers are always amazing. For retirement, you get the canoes, you get the sunsets and you get to pass right by the Alzheimer’s wards without worry.

Message after message, regardless of company, is that you just can’t do better than working with its people—except that “its people” have no name. Sometimes they show an actor who obviously “cares.” Yet he or she is still working within the context of a faceless, disembodied, amorphous company that makes no representations about its people’s qualifications, expertise, loyalties or objectivity.

Sad to say, this industry also includes folks with otherwise terrific credentials who have chosen to function essentially as tenant farmers. These are the ones, especially the CFPs, who simply can’t grasp the issues around “fiduciary.”

In my family, we have a great word: “butcept.” “Butcept” basically means there is just one teensy little problem—which, of course, is never actually “little.” This lovely word came to us many moons ago courtesy of our 7-year-old neighbor named Chris, who agreed to take care of our cat while we were away on a five-day road trip. It was his first job for money, and he was unduly attentive, with a strong sense of duty. Everything started off fine as we delivered meticulous instructions on the care and feeding of a young feline. Upon our return home, the young fellow rushed to greet us. “I did everything I was supposed to do,” he said. “I kept the cat’s bowl filled with water. I fed her every day. I cleaned her litter box.” He looked up. He looked down. He shuffled his feet and couldn’t quite look us in the eye. “Butcept there is just one little problem. I haven’t seen the cat for five days.” And he started to cry.

We assured him that he had done a great job and that the cat would turn up—which it soon did, of course. We thanked him, paid him and had ourselves a word that has served us well ever since.

And it applies quite nicely to the financial services industry. The industry has a lot to offer—butcept it does not belong in the same space as the financial planning profession.

This is not a rant or hidden pitch for going “fee only.” Quite the contrary, I am prepared to extend full courtesies to industry for the excellent job it does creating quality financial products at reasonable prices. When I think of the load structures that existed 30 years ago—and the products now available—industry is clearly a good supplier.

And it generally does good work, butcept for this one teensy little problem: It should not be confusing itself with the financial planning profession.

In the immortal words of the late but legendary CFP Harold Gourges, healthy industries must address three separate functions: manufacturing, advice and sales. Trust me, Gourges was no fire-breathing fee-only ideologue. But he did not want to see functions confused. “When you go to your surgeon for your physicals, you end up with a lot of scars.”

Industry has done a lot that is admirable, but it has gone too far. It not only wants to be the product manufacturer, it wants to be the salesman and the advisor, too.

So what is to be done? I thought we got our answer in 2007 when the FPA prevailed in its case against the SEC, where the U.S. Court of Appeals said the commission did not have the authority to exclude broker-dealers offering fee-based brokerage accounts from the definition of “investment advisor.” In other words, the broker-dealers had to comply with investment advisor rules and accept fiduciary status. Yet the problems remain. I guess it depends on what your definition of “definition” is.

There are consequences to this. So long as industry pretends to the advisory function it becomes difficult to communicate distinctions to the public or even to centers of influence. In like manner, as long as “financial planner” is essentially synonymous with “financial salesperson,” it is tough to do the kind of cross-industry research, credibility building and development that so ably serve the health services industries. Graduate programs, large-scale surveys and studies, and the like will suffer under allegations of bias and self-service.

Frankly, it also ensures whistles don’t blow. Financial planners are ideally situated to be functional checks and balances should industry once again lean to excesses. It saddens me to think how we could have changed history. Almost every financial planner I know anticipated the difficulties of the last decade. Among ourselves we talked about how easy money and the real estate markets would come to no good. Yet the silence was deafening. Unfortunately, there were real-life consequences as many financial plans crashed and burned, in the process taking earnest, trusting, naïve investors down with them.

Perhaps most seriously, it has harmed the credibility and viability of the financial planning profession and kept it from standing on its own and developing its full potential.

Some might contend the genie is out of the bottle. We have the confusion and the mess. And we still have the realities of industry continuing to posture as financial planners and way too many so-called financial planners standing on the sidelines believing “if it sells, it must be good.”

Nonetheless, we are entitled to insist on the dignity and development of our profession. Financial planning is not the equivalent of the financial services industries. My mantra continues to serve: “We are not them. They are not us.”
You bet.

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.