An Education Summit

This year, the annual meeting of the Certified Financial Planner Board of Standards was not only a multiday affair in the first week of August with separate sessions for education program directors and certificants, but the public was invited as well, and they attended in significant numbers for the sessions and a planning clinic where more than 2,000 folks got personal advice on their finances from volunteer CFPs. Held in Los Angeles and Santa Monica, the meeting attracted plenty of certificants and notables from the political, regulatory, and monarchical world, including former Senator Bob Kerrey (D-Nebraska), former SEC Commissioner Cynthia Glassman, and the incoming Chairman and CEO of NASD, Mary Schapiro, but also Queen Noor of Jordan.

Kerrey, now president of the New School for Social Research in New York, spoke to attendees and the public, speaking bluntly and in a nonpartisan way, as when he served in the Senate, about some of the tough choices Americans must make about Social Security, Medicare, and the high cost of higher education. As for Medicare, Kerrey noted that it is a “legal claim on all of us,” and further asserted that because of the troubles with Medicare, the government “would be bankrupt if it were a private business.”

As for financial literacy, which CFP Board CEO Sarah Teslik said was a major theme of the conference, Kerrey lamented that “we haven’t taught economics in a practical way” in grades K through eight, and while he admitted that “individual financial planning tied with higher education is an unnatural alliance,” he nevertheless called for an investigation of how to make that connection in a practical way. Being a strong proponent, not surprisingly, of education, especially the higher variety, Kerrey said “I don’t think we spend enough on kids,” laying the blame on the fact that “80% of the people over age 65 vote,” while only 10% of under-25 year-olds who are eligible to vote do so.

In her first speech since she left her post as a commissioner at the Securities and Exchange Commission, Cynthia Glassman addressed the issue of fraud, especially among older citizens, the focus of the recent SEC Seniors Summit. Noting that “80% of [privately held] assets are held by over-50-year-olds, that’s where the fraudsters go,” and called on CFPs to be part of the solution in educating consumers. It’s even more important that consumers be financially literate these days, Glassman argued, noting that more than 50% of households owned mutual funds in 2004, compared to only 6% in 1980.

Referring to adoption by the Commission of the so-called Merrill Lynch exemption, she said that the final rule’s “proposed disclosure was successful in alerting consumers to ask whether the person [providing services to them] was a broker or an advisor,” but admitted that it was less successful in informing consumers “what the difference was” between the two.