The Financial Planning Association is in the earliest stages of reaching out to associations and regulators as it presses forward with its strategy to seek legal title protection for financial planners, FPA Chairman Skip Schweiss said during a webinar hosted by the Institute for the Fiduciary Standard last week.

“We are in the very early stages of reaching out to various parties in the financial services industry to have conversations about what different organizations and thought-leading individuals think this should look like,” Schweiss said.

The next step “is to really confer with all these entities about what their thoughts are and I think that is where we flesh out where the opposition might be, where the ‘gee we’d support you if it looks like this, but not like that.’ We’re just in the very early days at this point,” added Schweiss, who is also CEO at Sierra Investment Management.

If a professional is going to call him- or herself a financial planner, “you ought to have certain credentials. Consumers instinctively know that I can’t just call myself a doctor. We think that ought to be the case with financial planners as well,” he said.

The FPA understands this is an uphill battle. “Please make no mistake about it. Title protection is a major undertaking that will likely take many years of hard work, perseverance, and, more importantly, unwavering leadership by FPA as the Association that is committed to the legal recognition of financial planners,” FPA President Dennis J. Moore said in a statement.

The FPA recognizes “that not everyone in financial services will share this same bold vision, and we accept that. But we know this is what’s right for our members, consumers, and the profession of financial planning,” Moore added.

Pundits on the panel, including Financial Advisor Magazine Editor-in-chief Evan Simonoff, Jeffrey McClure, an investment advisor representative with Personal Wealth Coach in Salado, Texas, and moderator and Institute President Knut Rostad, said they agreed the goal is worthwhile, but fraught with numerous bureaucratic landmines.

Chief among FPA’s challenges is whether to pursue title protection at the state or federal level, Simonoff said.

“The issue that I see ... is how best to achieve this. It appears [the FPA would] want to do this on a federal level, which would obviously be the most efficient and effective, but I also don’t know how realistic that is. Getting Washington to focus on something like this is not an easy task,” Simonoff said.

“Is there a feeling that if the FPA were able to get a few big states, say California, New York, Florida and a handful of others to embrace this ... that it could become a fait accompli? Or is this going to take a big bear market and something like another financial crisis and millions of Americans to suffer fairly irreparable financial damage, to get lawmakers’ attention?” he asked.

McClure, who authored his masters of financial planning thesis “Profession and Practice of Personal Financial Planning" in 2014, said that eight years later, financial planning is still a trade, not a profession.

“Bottomline, for all professions, they have to be licensed at the state level. I think the CPA [certified financial planner] model and the engineer model are really good models to go with, and they’re both regulated at the state level,” McClure said.

One possible obstacle to title protection that is the CFP Board of Standards itself, the advisor added.

“The CFP Board earnestly wants to hang on to this, because it’s their source of income and identity. Turning it over to state boards as other professions have done would make the CFP Board like the AMA [American Medical Association]—a voluntary membership organization. Frankly, that would make it like the FPA,” McClure said.

Despite a number of assurances that the FPA and CFP Board are still friendly, the FPA has said it will exit the decade-old Financial Planning Coalition, which will leave the CFP Board and the National Association of Personal Financial Advisors as the coalition’s only two remaining members.

“It’s been reported that FPA decided to exit the coalition due to differences over the title protection initiative,” Schweiss said. “I can tell you I was in the [FPA] boardroom for the discussion and cast a vote and that really wasn’t the driving force.

“We’re still going to work together, we’re still friends, but FPA is really going to apply its resources now to the title protection initiative. One of the things we’ve heard from our members is that it’s time to focus on one issue and not a whole host of issues and that is the direction we’re going,” Schweiss added.

Rostad, who has advocated for tougher fiduciary standards for planners, said the FPA’s new goal of developing new minimum standards “makes it seem as if the past 15 years with [the CFP Board] doesn’t exist.” The group’s latest “Code of Ethics and Standards of Conduct” went into effect in 2019, after years of deliberation and rewrites.

While the CFP Board is on the record saying they do not believe state licensing would work, Rostad said “the whole notion that anyone serious would want to go back to Congress or the SEC has slept through the last 15 years, because they’re not seeing the destruction to advice and fiduciary at the hands of the SEC.”