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Financial Planning > Behavioral Finance

The Global Planner

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Here’s a startling statistic: By the end of this year, the number of non-U.S. CFP certificants will likely surpass the number of U.S. certificants. It’s the clearest signal yet that the financial planning profession is truly becoming globalized.

Many of us in financial planning and investing have used the word “globalization” for a while. It’s a popular business buzzword, and we use it in reference to economic growth in China, increased trade with Latin America and other similar developments. A good financial advisor today incorporates global investments into his or her client’s asset allocation.

When I began research for this column about globalization, I thought that I would be writing about international investments, asset allocation and exchange rates. That’s the type of globalization that matters to a financial planner, right?

Well, I did find that advisors are interested in international investments. It’s fair to say that international asset allocation for clients has become fairly standard practice.

However, I found that globalization means much, much more to our profession. My key take-away from interviews with industry experts and my surveys of financial advisors is this: While there is no consensus on what we mean when we say “the globalization of financial planning,” it is coming, and it will have a big effect on our profession.

It will take several columns to share all that I’ve learned about globalization. So let’s begin.

First, globalization surely is about making smart international investments for clients. This is a tremendous challenge for even the most sophisticated investment manager.

Second, globalization is about commerce. Some Americans express concern about the impact of global trade on U.S. jobs and economic growth, but it’s hard to imagine that the increase in international commerce will be reversed.

Next, globalization has a very specific meaning in the context of delivering personal financial services. Nobody knows how many adult Americans are living abroad, but it’s a big number: More than 6 million Americans living abroad were eligible to vote in the 2006 elections. For the first time ever, the 2010 U.S. Census will try to tally the number of Americans living abroad (a population segment that, potentially, is an important source of clients for financial advisors).

Of course, non-U.S. citizens flock to this country in even greater numbers than Americans who choose to live abroad. America remains the land of opportunity for most immigrants, while many retiring Americans find lifestyle and cost-of-living advantages living abroad. Maybe you have a client who’s a retired Indianapolis executive who lives half a year in Costa Rica. Or perhaps you have a computer programmer client who has financial ties with his extended family in India. Could be you have a U.S. client on work assignment, living in Nigeria for three years, who needs financial advice now and when he returns to Dallas.

Cross-Border ThinkingWith the U.S. dollar at historically low levels, people from around the world are investing in U.S. assets at what they see as bargain prices. Just ask any real estate agent in Miami or commercial property broker in New York City or Los Angeles. And these purchasers — some of them bringing considerable assets into this country — are potential new financial planning clients, with complex cross-border planning issues in tow.

Laura Brook, director of international relations for the Financial Planning Association (FPA), put it this way: “Your due diligence with new clients should include this question: ‘Are both of you U.S. citizens?’ If the answer is ‘No,’ you need to make sure you know how to handle cross-border planning issues.”

Yet, I learned that there’s even more to globalization — much more. Think about the “help desk” person in India who’s at the other end of the phone or computer. A broker at a U.S. financial services firm might be relying on a co-worker in Mumbai to provide information to his client. The software to track a client’s investments might be written or updated in India, too.

Now, here’s where it gets really deep: Maybe that person on the help desk is studying for her CFP. Remember, I started this column with the statistic that by the end of 2008, the number of CFP certificants outside the U.S. probably will pass the number of U.S. certificants for the first time. That’s what Noel Maye, CEO of the Financial Planning Standards Board (FPSB) told me.

The FPSB basically coordinates the CFP certificant program around the world, working in partnership with financial planning associations in 23 nations, including the U.S. As of Jan. 1, 2008, the U.S. had 56,511 CFP certificants, and the rest of the world had 55,328. But given the relative rates of growth, the U.S. will be surpassed by successful test-takers in the November-December 2008 international CFP exam cycle. Maye specifically pointed to China, India and Indonesia as driving global supply for advisors.

Yes, globalization has arrived, and it is impacting the CFP marks of distinction.

The Financial Planning Association has been one of the leaders in promoting higher standards for financial planners through the CFP mark. So it’s no surprise that FPA’s Laura Brook is an advocate for a globalized profession.

“The FPA believes very strongly that our profession is global in nature,” Brook told me. “We support its globalization through a three-pronged approach. First, we want to make the individual FPA members feel welcome, wherever they are from. Second, we want to help strengthen our sister organizations that grant the CFP mark. We work with planning organizations in Japan or Australia, for example, to strengthen their member-benefit proposition by licensing content to them, cross-promoting events and so on. Third, we support the global environment for planning as a whole, and we were an active participant in the International Standards Organization’s (ISO) standards-setting a few years ago.”

Brook foresees immense benefits for consumers and for financial planners. “All of us who are passionate about growing financial planning as a profession realize that we need to have recognized standards internationally,” she said. “Reaching this point will reflect positively on the U.S., where standards have been largely developed and adopted, such as the CFP mark.”

The CFP mark and the ISO standards cover similar turf, but they are not exactly the same. The CFP is a certification that is backed by an enforcement mechanism; ISO standards are more like industry best practices or a seal of approval, and they are not enforced by an oversight organization. But the two sets of standards aim for the same goal: better financial planning and greater appreciation by consumers for the service that a true financial planner provides.

In my next column, I’ll continue to write about international standards, especially the ISO program, and discuss what its eventual adoption could mean to the planning industry. I’ll also share my survey results about how today’s planners think about globalization, and where they see globalization affecting their businesses.

Marie Swift is the president of Impact Communications, a marketing and communications firm for independent advisors; see


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