Advisor Morris Armstrong recently took the CFP Board to task on his “Financial Planning for You” blog over the issue of “grandfathering.” A ChFC himself, Morris was responding to a recent letter by Board CEO Kevin Keller favorably comparing the CFP with the ChFC, in part because of extensive grandfathering over the years by the American College.
Now, as you may know, I haven’t been a particularly big fan of the CFP Board over the years, for reasons too numerous to go into here. But, perhaps surprisingly, grandfathering isn’t one of them. Which gives me the inclination, perhaps also surprisingly, to stand up for the Board on this one issue.
Morris, on the other hand, seems to feel that the American College’s grandfathering escapades over the years (and they’ve been many) are child’s play compared to the CFP Board’s sin of “grandfathering” existing CFPs when it instituted its formal exam in the early ’90s. He seems to imply that telling the world CFPs have passed a rigorous exam when all of them haven’t is tantamount to a fraud on financial consumers.
Let’s take a deep breath here, and think this thing through. In general, grandfathering is probably an unfortunate practice; but it’s also very practical solution to the thorny issue of upgrading professional standards. Virtually all professions do it. Certainly, state bar exams and CPA exams have changed over the years; I’m guessing there’s probably a section on electronic copyright now which wasn’t on the Bar exams in the ’60s. Did they go back and make all the old lawyers retake the Bar? No, it just not pracatical.
But the more important point here is that all professional certification is taken on faith by the public. They don’t know how to tell if a lawyer, or CPA, or financial planner is qualified to work with the public: What education, or experience, or testing is the minimum. That’s why we put together boards of those professionals to come up with standards. And if a “test” is required, the public has no idea if it’s a mind bender or a cakewalk.
So the notion that any given CFP may or may not have passed is somehow misleading strikes me as silly. What a financial consumer knows is that the CFP Board has determined that each CFP as the knowledge and the skills and the ethics to practice as a professional in the best interest of the public. Which is the same trust they put in state Bars or CPA boards. To my mind, the more relevant question is whether professional financial planners truly believe that in its zeal for market share–and currently to become the financial planning regulator–the CFP Board has adopted high enough standards to truly protect the public. If there’s any fraud here, that’s where to look for it.