The Financial Planning Association has signaled its intent to leave the Financial Planning Coalition at the end of 2022, according to FPA board chair Skip Schweiss. Senior officials active in the membership association described the breakup as amicable.

One reason for the apparent move is that the FPA wants to pursue “title protection” and focus its resources primarily on that problem. Since the profession was formed in the late 1960s and 1970s, advisors and planners have found it highly problematic that any citizen can call themselves a financial planner. 

The reality is that there are no real laws or regulations that prevent children or even cats from calling themselves a financial planner and dispensing advice. In contrast, hairdressers, barbers and numerous other tradespeople must be licensed.

The FPA’s move is producing frustration and displeasure among other organizations and individuals in the profession who believe a relatively small, young industry needs to speak as a single voice if it wants to have any clout in Washington, D.C., or the national conversation about the evolution of advice. The Financial Planning Coalition was formed about 12 years ago by the FPA, the CFP Board of Standards and the National Association of Personal Financial Advisors to marshal their collective strength to leverage their influence on regulatory issues.

When contacted by Financial Advisor, the CFP Board said, “CFP Board is disappointed that FPA has chosen to leave the Financial Planning Coalition. We believe the public and financial planners are best served when the leading national organizations representing the profession speak with a unified voice on policy issues.”

This disappointment may explain why the FPA intends to downplay its exit. “While we are not going to make a formal announcement, the FPA Board of Directors has decided that FPA will depart the Financial Planning Coalition at the end of the year,” Schweiss said. “We believe this will allow us to fully focus our resources on the legal recognition of financial planners through title protection.

“Whether CFP Board and NAPFA are supportive of our decision to pursue title protection is something they will need to determine for themselves in the best interest of their organizations and their stakeholders,” Schweiss continued. “Our decision to leave the coalition doesn’t mean FPA will not work with CFP Board and NAPFA on other issues and in other capacities. We respect them, consider them friends, and look forward to building on those relationships in the coming years.”

Schweiss said the FPA conducted a member survey this spring and title protection surfaced as the top issue. Fully 78% of the association’s members urged the FPA to pursue the issue and only 4% were opposed.

Schweiss said the profession needs to be better recognized and the FPA needs to put its resources behind the move.

Apparently, FPA officials met with leaders of the CFP Board and NAPFA in recent months and some FPA leaders voiced concerns that the coalition was ineffective. They immediately were subjected to skeptical questions. One official at another group asked how the FPA, with about 19,000 members, could wield more influence than a coalition with 93,000 CFP certificate holders, as well as about 100,000 professionals in total. 

Other leaders in the profession were more supportive. "FPA has been a huge champion for fiduciary financial planners, as we saw in their winning 2004 lawsuit against the SEC. But now as competition has increased from all corners, they need to re-establish their own unique value proposition," said Knut Rostad, president of the Institute for the Fiduciary Standard.

Michael Kitces, the co-founder of the XY Planning Network and publisher of the industry blog Nerd’s Eye View (and a frequent FPA critic), said the different views on title protection have a lot to do with the split between the Financial Planning Coalition’s members. The FPA conspicuously declined to say that the “financial planner” title it wants to protect would be tied to the CFP marks. Another likely rift is that not everybody wants to fight this battle at the state level.

“Why is the FPA talking about looking at this at the state level when most other organizations, especially the CFP Board, have been very strident in saying this really needs to be federal regulation because advisors typically practice-multi-state?" Kitces asked. "If you do this at the state level you generally end up with a patchwork of 50 state rules.

“The core issue around title protection to me is that ultimately comes down to: what regulator is going to protect the title under what authority or jurisdiction?” Kitces said. “And do they actually have the means to enforce it? … The big question from everyone now is: What exactly is the game plan? Because it’s not actually title protection unless some regulator enforces it.”

The FPA’s initiative to advance the profession via restriction of the financial planner title is likely a multi-year, and perhaps even a multi-decade, effort. "There are several different paths that might exist to make this happen—as an add-on to federal or state regulation under existing structures or even as a new professional regulatory organization," said Ron Rhoades, director of financial planning and an assistant professor at Western Kentucky University.

"The Financial Planning Coalition has undertaken a lot of good advocacy work over the past 12 years or so since it was formed. I would hope that the CFP Board, FPA and NAPFA continue to find common ground on various issues confronting the emerging profession, even if the Financial Planning Coalition formally dissolves," Rhoades added.

Geoffrey Brown, the chief executive officer at NAPFA, expressed surprise at the FPA’s plan to leave the coalition and said he needed to learn more before responding. He did say that advisors in his 4,440 member-strong organization have historically asked that their regulatory regime not be any harder—and that they generally wanted a federal standard for pursuing title protection.

“We’re open to either option,” Brown said. “Our preference would be federal so our membership isn’t subject to a patchwork regulatory regime in all 50 states.”

When it comes to what the title protects, Brown said, “Our preference would naturally be that it be based on CFP standards.”

The FPA currently has 19,000 members.

--Washington Editor Tracey Longo contributed to this story. This story has been updated.