Although the market has rebounded from its spring lows, clients of financial advisors are not relaxing: “They are waiting for the other shoe to drop,” according to the head of the Certified Financial Planner Board of Standards.
The current situation makes this a prime time for financial advisors to act, said Kevin R. Keller, CEO of the CFP Board, in an interview Thursday.
“In April, CFP Board did a survey that showed 64% of the clients of CFP mark holders were experiencing very high or high stress levels because of their finances,” Keller said. “Although they are still feeling stress, those who work with a CFP professional are calmer because they know their advisors are dealing with their entire financial life and has the knowledge” needed to help.
The CFP Board has also been trying to stay ahead as the industry transforms. Financial advice used to focus on investments, but advisors are increasingly called upon to offer more holistic planning.
“This is creating a mismatch,” said Keller, because the holistic planning still isn’t reflected in the fees being charged for investments.
That means advisors need to demonstrate the value they are providing, he added. “The hallmark of the CFP certification process is [to train advisors how to provide] competent and ethical advice.”
This evolution has also brought about changes at the board, which in June began enforcing the new standards of conduct and code of ethics that had been developed over the last several years. Keller noted that the board provides a guide to the host of resources available to help CFP mark holders meet the new standards, which can be found at cfp.net/ethics/compliance-resources. The board is in the beginning stages of enhanced reviews of CFP mark holders to make sure they comply with the new standards, Keller said.
D.A. Abrams, who has been managing director of the board’s Center for Financial Planning since November, said that the center has two long-standing goals: to increase diversity among planners and to increase the public’s access to planning resources. The former has become especially urgent given the ongoing racial tensions in the country.
Abrams said the board, which has been involved for five years with promoting diversity within the profession, will hold a virtual diversity summit from November 18 to November 20.
“We have been very intentional in our efforts to increase the presence of women, African-Americans and Latinx advisors,” he said.
“While the financial planning profession is making strides—the number of Black and Latinx CFP professionals increased by 12% from 2018 to 2019—it is not enough,” the board said in a statement. Black and Latinx individuals make up only 3.8% of all mark holders, the board said. “It is imperative that the profession diversifies to meet the needs of the country’s increasingly diverse population.”