Letters

A Different View
I enjoyed looking over your magazine recently, and as a dinosaur does on occasion I actually read an article that I was drawn to from its title. The article I am referring to is on page 115 from Tom Lydon about the bond market [July 2011, "A Bear Market For Bonds?"] I do understand that the theme of the article is to give his opinion; however, on page 116 beginning with the second paragraph, he begins with what to do if clients are "sitting in long-term Treasuries." His next line, "When the Fed raises rates, prices will fall, yields will rise, and principal will be at risk," is not an accurate conclusion to reach. He could insert the word "may" in place of will and also mention briefly where on the yield curve rates may be affected. I don't mean to be overly critical, but since your magazine is supposed to be for the sophisticated advisor I just wanted to give my opinion.

Richard A. Jackson, financial advisor, Raymond James
Financial Services
Boynton Beach, Fla.

Reflections On The Profession
Pertaining to the FPA, and your editorial of April, as well as the Gluck Report, I have the following thoughts: As one of the first members of the IAFP and ICFP, I am truly amazed that the two organizations were able to come together to form the FPA. The divergence of ideas, methods, sales, fees, practices, goals and so on were able to be put into a common theme for the practice of financial planners. As for the loss of membership, it has been mentioned in the April issue to have several causes. The FPA seems to me to have a theme that to be a financial planner, one should be a CFP, which there is no argument about. A standard has to be set, such as when the medical field requires an M.D. degree, and accounting a CPA designation.

CPAs should be at the forefront of advising people of the need for a financial plan, tax shelters, investments, estate planning and the different venues that the financial planning process takes. They meet with clients on an annual basis, and many times at other appointments during the year, and they should be up to date on these attributes of planning. There are many other designations, but none as far as I know that puts the financial package all together or has the training similar to the CFP.

I am a licensed Series 7 registered rep, and I have in particular noticed two things about many individuals in this profession. The first is that most come to work at about 9 a.m. and leave at about 4 p.m., without a whole lot of investigation into investments. They obtain material from their home offices or leaders, and appear to push those products.
As a result of this comes the second thing I've noticed: It makes them look like they are nothing more than salespeople. I do not say this in disrespect, because I am a salesperson. It is that they are always pushing for the purchase of equities or products, without much mentioning of selling. They seem to be one-sided! These individuals, as well as many of the broker-dealers, have an attitude or agenda different than those of us who provide full financial plans. This, obviously, as the Gluck Report mentions, has caused a segregation of what is trying to be accomplished by advisors. In discussing financial matters with many stock brokers, I have yet to have one ask me about my estate plan, if I have a will, if I have a durable power of attorney, etc. I am not downing this action, but they don't feel that is their job. However, many of these individuals have a great knowledge of securities that I would never hope to have. They are involved with options and commodities, and there is an endless list who have created a great deal of wealth for their customers.

Then we come to the types of practices that many others of us have. As a registered rep, and a member of a broker-dealer, the hassle of rules, regulations and so on are almost overwhelming. My broker-dealer's compliance department is excellent, but sometimes it takes weeks to do anything. I depend upon them to keep me out of trouble, but so many rules and regulations have been enacted that the days of being an entrepreneur are almost over. The definition of the "fiduciary standard" is all over the place. My definition is to put my clients' interests ahead of my own. This has always been my standard for 44 years, and it is hard to believe that others would not have this same sense of proper etiquette. I even think car sales people should have a fiduciary responsibility, as well as anyone in the sales business. As one who is dually licensed, the idea of going to fee-only is more appealing every day. I started as a salesperson, and that is ingrained upon how I perform business, even though I will do fee-only if that makes a potential client feel better; but my advice is always objective. Some products that I sell, particularly some insurance contracts, are better sold as commissioned products rather than non-commissioned ones for the benefit of the client.

The final comment deals with the FPA itself. Just as a general statement, it seems that for the last four or five years, most of the meetings have been in the Midwest or on the West Coast. Two years ago, when the meeting was near Disneyland in California, I thought it was a pretty substandard convention. Of course, this was right after the 2008 crash, and many vendors were not present and the programs were not particularly enthralling. In addition, it is quite an expense to fly out West, not only monetarily but time-wise. One of the reasons I attend these meetings is to attain CE credits, review products and meet with old friends. The past couple of FPA meetings have not overwhelmed me in this respect. Thus, for the past couple years, I have tried to attend more local and regional conferences.

The FPA, created by merging the ICFP and IAFP, has more or less rested on its laurels, and has witnessed the expansion of other financial organizations. Many of us in the FPA are growing older, and not enough new members are being recruited. The more mature members have been independent, and the others coming into the profession are working mainly for banks, brokerage houses and similar organizations, where they do not think of themselves as a financial planner.

As I stated above, I am discouraged by having to follow all the rules and regulations to be registered as a Series 7, but also being a CFP since May of '82 is wearying. Having to pay fees, do continuing education and so on are rather burdensome to me. In the last five years, none of my existing or new clients have asked me if I have that designation. The FPA has been working diligently on creating the image of having a CFP as the financial planning organization designation, but evidently this has failed for many others, and I am seriously thinking about this myself.

Ben C. Kaufmann,
CFP, ChFC,CLU, CIC
Ben C. Kaufmann Agency
Lexington, Ky.