Few could have imagined it back in September 2000 when the newly created Financial Planning Association held its first national conference. More than 4,000 professionals attended and the group appeared poised to become the nation's leading voice on the business of financial advice. For several years, things went wsmoothly and it appeared the FPA would fill that void, achieving the goals of those who created it.
It didn't happen. Some day, when the association for associations, dubbed the American Society of Association Executives, holds its annual conference and decides to do a session on how not to implement a merger, the consolidation of the Institute For Certified Financial Planners (ICFP) and the International Association For Financial Planning (IAFP) into the Financial Planning Association could well be Exhibit One.
The fallout from the ill-starred merger in 2000 was recently the subject of a blog by the brilliant young advisor Michael Kitces. Since the merger, the FPA’s ranks have declined more than 20%, from 30,000 to 23,000. Since the 2008 recession, Kitces notes, membership has declined by 19% while revenues have fallen by 36%.
Kitces is hardly the first to write about the FPA’s woes. Andy Gluck wrote about it in these pages and yours truly penned an article in November 2003, entitled “Contest For The FPA’s Soul,” which asked if the ICFP’s agenda was winning. That rhetorical question has indeed been answered in the affirmative.
In 2003, the FPA, under the influence of ICFP-types, showed the door to its broker-dealer unit, which became the Financial Services Institute (FSI). The move made sense at the time from a structural standpoint. For years that broker-dealer unit of the old IAFP had considered slpitting off on its own. Yet athough it was originally set up as a broker-dealer-only group, FSI today has about 37,000 advisor members as well.
In his blog, Kitces goes so far as to ask if the FPA’s market-share erosion ultimately could cause its untimely demise. It should be noted that Kitces, like many of the FPA’s critics, is a member and friend of the association who has volunteered much of his time to support it.
Still, he can’t help but observe that the FPA’s shrinkage has occurred at the same time that the number of CFP licensees has almost doubled. The CFP Board of Standards isn’t a membership organization, but with about 70,000 mark holders paying to maintain their licenses, it has far more money than it needs to fulfill its original mission and must spend its assets to maintain its non-profit status. Other associations like the FSI, IMCA and the CFA Institute are also flourishing.
What’s striking is that at the FPA’s outset in 2000, it decided to become more CFP-centric. In doing so, it managed to alienate many non-CFP professionals, but failed to achieve a net increase in members from the surging population of CFP certificants.
In Kitces’s view, the rising financial power of the CFP Board, which was spun out of the old ICFP, now directly threatens the cash-strapped FPA. The CFP Board has $23 million in cash, while the FPA is down to $2 million in net assets and could find itself in a precarious position come the next recession. Were the FPA to cease operation, the CFP Board would have more than enough resources—and a universe of 70,000 potential members—to finance a new parallel membership organization. The board’s current 501(c)(3) status as a charitable non-profit prohibits it from serving as a membership association.
Some speculate that the CFP Board already has enough clout in terms of finances and licensees to dictate a merger and subsequent spin-off on its own terms. Such a move might be controversial. Though that has never stopped the CFP Board before, presumably any potential acquirer of the FPA would want to retain its members’ good will and strong network of chapters.
The FPA may still manage to resuscitate itself by creating a value proposition more CFP certificants find compelling, which would be beneficial for the entire profession. But that will require business moxie, hard choices and soul-searching. Given the success of other organizations, including several spun out of the FPA and its predecessors, the odds don’t look great.
Evan Simonoff, Editor-in-Chief
E-mail me at email@example.com with your opinion.
FPA RESPONSE TO EVAN SIMONOFF/FINANCIAL ADVISOR MAGAZINE
December 2, 2014
By Janet Stanzak, CFP - 2014 FPA President
It’s unfortunate that Evan Simonoff did not attend the FPA Annual Conference in Seattle this past September or the Chapter Leader Conference held two weeks ago. Had he been there, he would have seen a Financial Planning Association (FPA) that is much different from the one he paints in his recent editorial “What Went Wrong?” on December 1, 2014.
FPA has been, and always will be, the professional membership organization for CFP® professionals. This was sewn into the fabric of our association during the merger in 2000 and is a primary focus as we look to build a strong organization and the future of the profession. It has been said and needs to be reiterated – FPA is a voluntary membership association. Those who choose to affiliate, including nearly 17,000 CFP® professionals, are among the most dedicated, involved, and engaged professionals in financial planning. These are planners who believe in advancing financial planning and working to make the profession better for all in it. And while many associations are suffering from a shrinking volunteer leadership base, FPA boasts over 1,000 volunteer leaders representing our 93 chapters, committees and task forces, all of whom are committed to building the financial planning profession based on appropriate policies and valuable deliverables to our members.
On the matter of declining membership, allow us to point to a portion of a response to the post made by Michael Kitces on his blog where this matter is addressed head on:
“Of course FPA membership at the time of the merger was at our highest, since membership rosters of the two organizations were simply combined and some fallout was expected post- merger. This is not to say that there haven’t been significant challenges and learning opportunities along the way. FPA has always been CFP® centric, but there have been different strategies used over the years to achieve membership growth. The lessons learned motivated the FPA Board of Directors to deepen our policy and business commitment to the CFP® marks in August 2012, which resulted in the following strategic directive:
To be the recognized and unquestioned professional membership resource and advocate for CFP® professionals by embracing the concept of “one profession/one designation” as our sole business directive and policy filter.”
While Mr. Simonoff’s rehashing of FPA membership levels is old news, we are pleased to point out that membership is seeing positive movement. Over the past two years, FPA has seen member retention increase by 2% and retention of CFP® professional members up by 5%. We directly attribute this to clearer messaging and a commitment to delivering resources and programs that help CFP® professionals be better planners and better business owners.
Of course, any certification body like CFP Board where individuals must pay a fee to maintain their credential is going to have a large captured audience. That fact does not negate the immense importance of a profession needing both a certification (or regulatory) body that is public facing and a professional association that is practitioner facing and focused. CFP® professionals need an ally, advocate and business support partner; FPA is the unequivocal voice and support organization for CFP® professionals, which CFP Board has publicly recognized.