Will financial planning ever become a profession? I’ve been asking myself that question for 20 years. On good days, I look back and see how far planning has come and think it’s getting pretty close. On not-so-good days, I’ll read about another misstep by one of the industry’s organizations, or hear some shortsighted comments from an industry leader, and wonder if creating a profession of financial advisors is a goal for anyone but me. So this 25th anniversary issue of Investment Advisor seems the right place to make an honest assessment of where the planning movement is today, and its prospects of becoming a profession.

It’s hard to argue that financial planning hasn’t come a long way in the last 25 years. When I became a freelance writer at Financial Planning magazine in 1984, it was the heyday of the tax-shelter limited partnership years. The mammoth industry conferences would have given a Tyco party a run for its money. Back then, a CFP could be obtained only from a mail-order college that also owned the mark. Fresh in everyone’s memory were IAFP board members–and even a few chairs–whom had run afoul of the law.

Against that backdrop, the current state of financial planning looks pretty good. There are over 300 financial planning programs at accredited U.S. colleges and universities; the CFP Board is a standalone regulatory body; the product of choice for most planners are heavily regulated mutual funds; there is virtually one financial planning organization; the vast majority of planners’ compensation comes from one fee or another; and the biggest parties at the FPA convention are now thrown by magazines.

Taken as a whole, it’s not bad progress in a short quarter-century. The problem is that if you drill down on any of the “progressive” fronts, you often find more fluff than substance. For instance, while having one organization is essential to a vibrant profession, the FPA still appears unclear whether it wants to be an association of professionals or a more lucrative–and less effective–big tent for everyone who wants to call himself a financial planner or market through one. As for compensation, introduction of the alphabet soup of mutual fund shares has made it virtually impossible for laypeople to determine whether their “advisor” is being paid for just this transaction or for ongoing service.

What’s more, in anticipation of the baby boom generation retiring, the financial planning community seems to be gearing up for a shift back to touting the same high-priced annuities that gave planners their second (or was it the third?) black eye back in the early ’90s. And while the number of CFPs continues to skyrocket–currently 49,000–one has to look at the Board’s increasingly close ties to brokerage firms at all levels and wonder whether the Board is still more interested in expanding its market share or identifying even wannabe professionals.

At the root of my dissatisfaction with the current state of financial planning lies a perhaps not-so-hidden agenda. For many years, I have believed that personal financial matters have become so complex in the United States and other economically developed countries that most people can benefit from professional, independent, objective advice to help them identify their goals and navigate through the financial services minefield to reach them. Further, I believe that financial planners represent the best hope of creating such a profession.

I suppose that means we ought to briefly explore what such a profession would entail. These days, the word professional has myriad meanings. We call someone a professional when they get paid for what they do, as opposed to an amateur who does it as a hobby. Often the term is applied to some vocation in an attempt to attach some of the credibility and respect of the larger meaning.

According to Edmund Pellegrino, MD, Professor of Medicine and Medical Ethics at Georgetown University Medical Center, these days a profession typically possesses “a body of special knowledge, practice within some ethical framework, fulfillment of some broad societal need, and a social mandate which permits a significant discretionary latitude in setting standards for the education and performance of its members.” Most people would agree that standard casts a pretty wide net.

But in his paper, “Professionalism, Profession and the Virtues of the Good Physician,” presented at the Issues in Medical Ethics 2000 Conference at Mt. Sinai School of Medicine in New York in November 2000, Dr. Pellegrino went on to point out that what we mean by “a profession” at the highest level are the standards that have historically been upheld by the so-called “learned” professions: The law, medicine, the clergy, and teaching.

“In its etymological roots,” he writes, “‘Profession’ means to declare aloud, to proclaim something publicly. On this view, professionals make a “profession” of a specific kind of activity and conduct to which they commit themselves and to which they can be expected to conform.” He goes on to explain that what they profess is a “certain degree of altruism, or suppression of self-interest when the welfare of those they serve requires it. This is the distinguishing feature of medicine, ministry, law, and teaching that sets them apart. They are in this sense ‘professed,’ i.e., publicly committed to the welfare of those who seek their help. They thereby become ethical enterprises…”

Ethical enterprises. That’s what I’m talking about: Financial planners professing publicly to put the welfare of their clients above their own. Why is this important? Society has long recognized that when people are in situations where they need the help of people who know more about things than they do, there’s potential for abuse. I’m convinced that the position of a financial advisor is every bit as influential as medicine or any of those other professions. That’s why the big financial institutions spend billions of dollars every year trying to convince people that their representatives are on the clients’ side, when in most cases they have no such duty. While sound financial principles don’t sound like rocket science to most of us, they are off the radar screen of even some of the most educated consumers.

Of course, the financial services industry knows this all too well: creating products that cost too much, perform too little, are applied too broadly, and unfairly shift most of the risks onto an unsuspecting consumer. That’s why, in today’s world, financial consumers need a professional advisor–someone who is truly on their side, who will help them separate facts from marketing hype, who will help them understand how personal finance really works and will work for them. Without one, they haven’t got a chance.

Are today’s financial planners such professionals? Sadly, I think we’d have to admit that while some are, many are not. Planning does indeed seem to be moving in the right direction. But its typical two-steps-forward, one-step-back approach can make for agonizingly slow going, in light of the millions of people who need professional help. To take financial planning from here to there, here are a few modest suggestions:

Break out of the distribution chain. At the risk of sounding like a dialectical materialist here, when I look back at the history of financial planning, I see the struggle of two opposing forces: The desire to give clients sound, professional, objective advice on the one hand, and the economic seduction of distributing products on the other, which in finance, as fund companies, insurers, broker/dealers, and wholesalers all demonstrate, is the huge amount of money made distributing financial products. I’ve always respected independent financial planners because they usually could make more money “selling” financial products, but prefer to focus on better serving their clients instead. That’s a great start, but to be a profession, planners need to go further, and cut the cord with the distribution system.

Profess a duty to put the client first. Professionals are fiduciaries for their clients. Period. We can quibble all day about the language, but professional financial planners need to get past all that. No more “We’re-fiduciaries-when-we-wear-our-Series 65-hat-but-not-when-we’re-Series 7-brokers.” Horsehockey. Professionals are not professional part of the time.

Get paid by the client, only. To truly represent someone, you have to be paid by them. Directly. No more “Well, my-commission-is-really-paid-by-the-client” blather. You could say the same thing about a car salesman. Professionals get paid by their clients, either by check or direct deduction from their accounts.

Set standards for independence. Here’s the real crux of the matter: to be a true professional, particularly in financial services, you have to be economically independent. Otherwise, you’re serving two masters and have a conflict of interest. Again, we can debate about what exactly economic independence entails. That’s a job for the profession. But at a minimum it has to make sense to laypeople, and I would think it has to include being paid directly by the clients, and owning your own business, or owning one in conjunction with other professional planners (or other professionals such as lawyers or CPAs).

Pick one designation and support it. Since the CFP has emerged as the designation for financial planners, it might as well be for professional financial planners, too. It’s important that professions have a clear indication of their required educational background. You need a designation, the CFP is the leading candidate, go with it. The key is what the CFP stands for (see below).

Take back the CFP Board. What’s wrong with this picture: Financial planners are regulated by the CFP Board which is made up of some financial planners, some brokerage house folks, some insurance company folks, some professors, some consumer advocates, and basically whomever the hell the Board decides to invite? Financial planners need to tell the Board to reorganize, or set up their own professional SRO.

Jealously guard your professionalism. If the medical profession’s experience with HMOs has taught us anything, it’s that you can all too easily lose your professionalism. So be ever watchful of those who’ll want to just harmlessly bend the rules, or your integrity. Who knows, maybe sooner rather than later, financial planning will become the profession that financial consumers need it to be.

Bob Clark, a former editor-in-chief of this magazine, sagely surveys the advisory landscape from his home in Santa Fe, New Mexico. He can be reached at rclark7000@aol.com.