From the February 2008 issue of Wealth Manager Web • Subscribe!

Eastern Promise

Sometimes we get a little myopic. It's easy to believe that what is important to us is similarly important to other people--that the way we do things must be the right way to do them, and so it's probably the right choice for others as well.

Recently, we had the chance to spend some time in Korea, speaking to the Korea Financial Planning annual conference. On the way, we spent some time in Japan. We saw a lot of people. Our hotel in Seoul was on the apparent equivalent of New York's Fifth Avenue--except that there were seven lanes in one direction and five in the other. So much for the "developing" world.

More to the point, while there, we had the opportunity to talk at length with senior people in the financial planning worlds of not only Korea, but also of Japan, Taiwan and China. It was an enjoyable and enlightening experience.

First, in case you're wondering, the shared language for all was English. Except for the Chinese and Taiwanese who seemed quite friendly with one another and occasionally spoke in Mandarin, all common conversation was in English. Two of the people--all men, by the way--had spent a number of years in Canada; in fact, the fellow from Beijing still had his family in Toronto. He had taught there for 10 years, up until two years ago when he returned to Beijing to lead the development of the financial planning program at Beijing University.

From what we were able to discern, most of those throughout Asia who are interested in financial planning or who call themselves financial planners work for banks or brokerage houses. They haven't yet figured out how to go independent. Certainly in Korea, there are very few equivalents to what we would call "independent broker/dealers." There are virtually no fee-only firms, although we talked to several planners who hoped to evolve into that mode over time. Due to these circumstances, much of the work being done in financial planning in those countries reflects the limitations, biases and processes of the financial services institutions. Clearly, the financial planning evolution in Asia is in the early stages, relative to the independent advisory world in the U.S. And as a result, the focus of those in the forefront of the profession and their issues of concern are somewhat different.


In Japan, the association of financial planners (JAFP) has seen steady growth in membership--currently about 160,000. The number of CFP certificants now exceeds 15,000. The JAFP works in close conjunction with the Japanese Financial Planning Standards Board.

In October of last year, JAFP introduced a new CFP certification education program to place more emphasis on the "practical skills" of CFP certificants: How to do the necessary analysis, how to run a practice, how to market, and how to work with real clients in introducing and using the financial planning process. As in the U.S., JAFP requires all candidates who successfully passed the CFP exam to adhere to a code of ethics and learn the six-step process of financial planning before they are certified as CFP professionals.

JAFP has also spent a good portion of its energy on improving consumers' financial literacy. Outside of investing in their employer, most Japanese personal "investments" go into the equivalent of bank savings accounts. As financial literacy improves (with the involvement of the media and educational programs), the JAFP hopes there will be a greater understanding of how and why to invest in the markets, which should serve consumers well in the long run.

In an attempt to foster an increase in the number of financial planning professionals JAFP held an "FP Day" last fall at 50 chapters throughout Japan. Free seminars and financial planning consultations were offered to thousands of consumers. In January of next year, JAFP will start a new program-- "Money and Life Planning Assessment Examination"--which aims to assess consumers' financial literacy through the Internet.


Although the KFPSB (Korean Financial Planning Standards Board, --equivalent to the CFP Board of Standards in the U.S.--has been involved for several years with the world community of financial planning leaders, the Korea Financial Planner Association was founded only this year. This is because the membership organization (think FPA) has only recently separated from KFPSB, the regulatory body and sponsor of the conference we attended. There were roughly 1,300 attendees, almost all employed by banks or brokerage houses. We were told there are only 40 "broker/dealers" in the whole country that do not fit the bank or large brokerage house mode.

Korea has 1,800 CFP certificants and 19,500 holders of the designation known as "AFPK" (Associate Financial Planner--Korea). This is equivalent to what was derisively referred to in the U.S. a few years ago as "CFP Lite." But when you are building an industry and a profession, clear steps along the way to full professional status need to be available. For Korea and other Asian countries that are in the early stages of developing a body of financial planning knowledge and practices, the AFPK has provided a means to get people involved, to introduce practitioners to the topic of financial planning and its basic tenets. In fact, we discovered that most of the countries represented by people we talked with have a designation that is roughly equivalent.

The Korea Financial Planning Standards Board, which is leading the charge in Korea, is itself led by the eminent B.C. Yoon, founder and former owner of Korea's third largest bank. His connections in government and securities regulatory offices (in Korea and elsewhere) have been invaluable in generating the governmental and institutional support necessary for the development of the financial planning industry. (It suggested to me that the CFP Board's recent move from Denver to Washington, D.C. has significantly improved its odds of influencing U.S. policy.)

Korea is working with the College for Financial Planning in the U.S. to develop some benchmarks for their professional training programs. They are soon going to introduce a certification program titled "Accredited Asset Management Specialist." Sooner or later, they expect to have their own CFP designation course, and a committee within the KFPA recently offered an award for the "Best Financial Planner" to a couple of selected CFP professionals.

For the profession to develop, public demand for its services needs to exist. To raise the profession's profile and increase public awareness of the need for and benefits of financial planning, the KFPSB has been providing free, ongoing financial planning services to consumers from its Web site. From time to time, they also hold "financial planning clinic" events that are free to the general public. To further professional development as well as public awareness, the KFPSB proactively arranges opportunities for its professionals to contribute articles to leading newspapers and magazines.

Last December, the Korea Academic Society of Financial Planning held its first-ever general assembly at Seoul National University. A number of professors there and at other universities have become very involved in the development of the financial planning profession. This meeting was the first formal gathering to discuss how to continue and enhance the relationship between academia and the practicing professionals and to determine other ways in which the academic community can add to the excellence of the practicing profession. Success here could provide a model for the world--including the U.S.--of how two very related communities can work together and grow the knowledge and practice of financial planning.

And finally, the Koreans have proudly composed a tune known as the "FP song" with the intent of providing financial planning professionals with a shared value and promoting the planning profession to the public.


We didn't have as much time to spend learning about the Chinese programs, but there were a few interesting nuggets that came up in conversation.

It is clear that, as in Korea, academia is a driving force for the development of financial planning as an important practice in China. Most of the early programs and professional development are coming out of the universities.

China not only recognizes the CFP designation and its sibling, the Associate CFP, but it is also readying the launch of a third designation for supervisors--those who don't actually work with clients and do the planning, but who still need to understand and appreciate its intricacies in order to provide better leadership. Roughly 10,000 have already signed up for this program. If the bosses appreciate the benefits and the requirements, they are more likely to support the development and practice of financial planning in the larger institutional settings. It seems to me that we in the U.S. could learn something from this, as well.

Travel is wonderful, not just for the pure joy of being in a new place, but also for the broadening of our exposure to new or different ways of being and thinking about things. The third world, particularly in Asia, has passed the U.S. in a number of ways. Because they didn't have the infrastructure, their wireless communication capabilities leaped ahead of what we have in the U.S. And while they still look to the U.S. as the experienced leader in financial planning, these countries are--by necessity--experimenting and innovating faster than is occurring in this country. They are working harder at learning from one another across borders, working more closely with government and academia and communicating with the consuming public. I suggest that while they continue to look to us for the basics of building a profession, there is much that we might learn from our Asian friends.

Norman M. Boone, MBA, CFP, is founder and president of Mosaic Financial Partners, Inc. a San Francisco-based fee-only financial planning and investment firm. He is co-creator of the award-winning IPS AdvisorPro, a Web-based Investment Policy Statement software generation solution for advisors.

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