It is critical the CFP Board raise their enforcement game because the biggest missing piece in the quest to professionalize financial planning is a separate regulatory body focused on financial planning. At this juncture planners are regulated based on implementation functions not on the actual financial planning role.
Only the CFP Board is even close to taking on all the tasks a separate regulator would need to perform. Mind you, I have no idea if that is what they aspire to but it’s the best the public has with respect to financial planning and is close to having all the pieces in place.
Financial planning is not a means to facilitate the sale of financial products. It is a professional endeavor that serves clients by helping them make the best decisions possible. Regulators don’t seem to get that.
A proper regulatory regime would require licensees to prove competence, maintain competence, adhere to procedural standards, adhere to ethical standards at a bona fide fiduciary level, and enforce those standards with punishments commensurate with the offense.
The CFP Board looks pretty good on most of these items. This WSJ fiasco has cast doubt on how well the CFP Board can provide the enforcement needed. Time will tell. I believe they can tighten up their enforcement functions, but only to a point. The CFP Board will still lack the legal muscle needed to mete out punishments such as fines, payments to victims, disgorgement of ill-gotten gains, suspensions or bans from practice, or imprisonment. Some offenses call for such punishments.
Even after the CFP Board fixes its mess, they will only be able to restrict the use of the marks. Reformation of the CFP Board enforcement will further solidify the marks as the marks of the profession but there is farther to go to ensconce financial planning as a true profession.
While there are a number of forces that can swamp the ship, I remain optimistic. The strongest force affecting us is consumer demand and no amount of faux planning supported by regulatory BS can stop it. People will see through the ruse as they have more and more over the last couple of decades and vote with their feet. Taking their hopes, dreams and hard-earned assets to where they are best served. It will just be harder for them to see the facts.
If you fancy yourself a professional financial planner, the profession needs you to stave off the challenges and move the profession forward. If you haven’t already, earn the right to use the CFP marks and volunteer to be subject to their rules, even if you think you don’t need the marks or found the WSJ piece disturbing.
Whether you are a CFP licensee or not, join the FPA (and NAPFA if fee-only), regardless if you like or don’t like your local chapter or what national has done or not done. These coalition partners are the only organizations that will advocate for the financial planning profession specifically. If that were the only service provided, it would be well worth your licensing fees and dues.
Those 13 men that met in Chicago in 1969 were right. Financial planning is different and makes all the difference. If we professional planners don’t continue to fight for our ideals, the movement to professionalization could get squashed by the monied forces of the financial services industry and the public will continue to get less than they need and deserve.
Dan Moisand, CFP, has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. He practices in Melbourne, Fla. You can reach him at [email protected].