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Financial Planning > Behavioral Finance

The China Syndrome: What Will We, and the FPA, Learn in China?

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Like most of you, I suspect, I’ve been following the unavoidable hoopla surrounding the FPA’s current excursion to China. In the interest of full disclosure, I should probably mention that over the years, we’ve seen many such expeditions—although perhaps none so highly touted—by dignitaries from various financial planning organizations, with, to my skeptical eye, precious little to show for them.

The CFP Board is usually behind such boondoggles, in its capacity as the driving force behind the “international” Financial Planning Standards Board, and I can remember many such trips, to Europe, South Africa and, of course, Japan. The only benefits that I’ve seen are for American financial planners to be treated with far greater respect and deference than they are afforded at home.

I know, this time it might be different. In fact, it already is: This financial planning “good will” trip is being wrapped in all the frothy hype of global investing, with China and its “second-largest economy” now the Golden Dragon of international opportunity. Don’t get me wrong; I realize there are expanding opportunities abroad as the Global Economy emerges. I’m just skeptical that frothy hype is going to help us uncover any of them. The last time I checked, there are over 100,000 CFAs who job it is to identify where those global opportunities might lie: I’m not sure what 40 American financial planners talking en masse to cadres of Chinese financial planners will add to their research.

Of course, there’s always the benefit to peoples of other lands of being exposed to the wisdom of all things financial planning of our luminaries. But with vast differences in regulatory structures and financial services industries, I always wondered how much of our financial planning experience is useful or even applicable in planners in other countries. What’s more, in light of recent events here in the Land of the Brave, particularly the effects of the 2008-09 Market Meltdown on client portfolios and the financial planning profession’s inability to participate in the Dodd-Frank reregulation of financial advisors in a meaningful way, one has to wonder whether we’re really any smarter than anyone else about financial planning and financial advice.

But I could be wrong. Perhaps this time there is some knowledge to be gained from conversations with Chinese financial planners. Maybe we could learn something from them; about alternative regulatory structures, and how Chinese planners deal with the challenges of regulation; about how a fiduciary standard can protect their clients from the sometimes conflicting agendas of their financial services industry; and the role of financial planning in the lives of Chinese families and how they approach convincing people to think long term about their financial futures.

And here’s a crazy idea: Maybe this time, the FPA could publish what they learn in a report or a white paper, describing what financial planning is like in China, and what we Americans can learn from them. If nothing else, it might begin to justify the cost of taking 40 financial planners and their posses to Asia for 10 days: You don’t have to be a financial planner to estimate how that will pencil out.


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