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- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Last week, leaders from the CFP Board, including CEO Kevin Keller, board of directors chair Nancy Kistner and chair-elect Ray Ferrara, traveled to the FPA Retreat conference and NAPFA's national spring conference. The purpose of the visit was not just to participate in the conference itself or check out the latest growth of the organizations; instead, it was to gauge support from these gatherings of the experienced planner community for a potential new initiative: the CFP Board is considering whether it should begin to offer CFP Continuing Education (CE) credit to its certificants, going into direct competition with the CE sponsors it is simultaneously responsible for overseeing, in an effort to raise the quality of CFP CE.
Not surprisingly, given the fiduciary focus of both FPA and NAPFA members and the efforts of the respective organizations on the Financial Planning Coalition—which is currently making the lobbying case for why a conflicted organization like FINRA should not be allowed to oversee registered investment advisors—planners from both groups were negative on the proposal, citing the blatant conflict of interest involved if the CFP Board were to compete with those it regulates.
While at this point, the reality is that this is just a preliminary discussion, and not even a substantively drafted proposal issued for comment, it nonetheless raises a more substantive question. Specifically, is this really the best idea the CFP Board has regarding how to improve the quality of CFP CE? Or does this proposal rather represent a strategic first step towards something more far reaching, like going into direct membership association competition with the FPA and NAPFA themselves?
Will the CFP Board back away from the proposal given the nearly unanimous negative feedback thus far, or will it further tip its hand in pursuing a new strategic initiative?
The Current State of CFP Continuing Education
Unfortunately, the reality is that the current state of CFP continuing education is far from ideal. In recent years, the CFP Board has increased its scrutiny when reviewing presentation materials submitted for consideration, but arguably the net result has simply been to frustrate a lot of well-intentioned educators and conference organizers, while actually punishing few wrongdoers.
After all, while the CFP Board may reject a presentation for questionable or overtly product- or sales-centric material on a presenter’s slides, there's nothing to stop a speaker from presenting with a "clean" slide deck and just using the microphone to sell directly from the podium. In fact, savvy product sponsors have long since figured out that as long as the slides are simple and apparently objective, there are few repercussions if any to delivering a thinly veiled sales pitched—sometimes, hardly veiled at all— in the middle of a presentation. At worst, the event organizers simply don't invite the company or speaker back again, which is of little concern since there are dozens and hundreds of either CE events to abuse.
This problematic state of affairs was echoed clearly during the comment period in response to the CFP Board's proposal to increase the number of required CFP CE credits from 30 every two years up to 40; the organization received a record-breaking 1,100 comments in response to the proposal, of which 85% opposed the increase.
The dominating theme of the negative feedback was clear when perusing the public comments themselves: certificants saw little value in an increase in the continuing education requirements when the current state of CE was already of such low quality. That suggests that if the CFP Board wants to lift the number of required CFP CE hours—arguably necessary if financial planning will ultimately be recognized as a profession, as the CE requirements for planners are woefully behind other professionals like CPAs—it first needs to clean up the quality of the education itself.
In part two of this series, we will look at realistic strategies to improve continuing education for CFPs.