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.