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May 22, 2012 at 08:00 PM
I recently sat down with two leaders of the Financial Planning Association—Marv Tuttle, executive director and CEO, and Paul Auslander, FPA’s president—to talk about the top issues facing advisors.
We began with the SEC’s attempts to put brokers under a fiduciary mandate; the aging of the profession and its lack of diversity; the importance of practice management and succession planning; the Financial Planning Coalition’s efforts in Washington; and how the younger generation of planners holds the key to moving the industry forward.
But something else is worrying the FPA: a drop in membership. As of May 1, FPA had 23,300 members, down 200 members since June 1, 2011, the start of FPA’s fiscal year. This drop, which Tuttle attributes mainly to the challenging times advisory firms are facing as well as differences of opinion over certain issues, has prompted the trade group to launch an “aggressive” campaign for new members, “largely from those in the CFP community and those who believe in how FPA stands for the practice and profession of financial planning,” Tuttle told me.
Tuttle says he believes there’s a “great opportunity” in the coming year and next for FPA to grow its membership. “There is a resurgence in the use of the financial planning process as the core for financial and investment advisory relationships today. This should bode well for FPA as the professional home for financial planning.” (This interview took place before Tuttle announced in early May that he plans to retire from his position in 2014.)
Tuttle acknowledged, however, that the FPA has to do a better job of communicating the value of membership for those who “believe in financial planning as a profession and the value of our efforts” to support members through everything from ongoing professional education to practice management programs.
Regarding whether the SEC’s attempts to write a fiduciary rule will eventually be unveiled, Auslander says he’s confident that the train has “already left the station;” now “it’s just how it applies.” SEC Chairman Mary Schapiro told me last month that she’s hopeful the SEC can release a fiduciary duty proposal this year. Auslander argues that the debate has now moved on to how a fiduciary duty for all advice givers “is going to be applied—and there are many different iterations.”
A fiduciary duty that would apply to all business models remains the biggest challenge, Auslander said, “but I think we can get it right.” He also pointed out that serving in a fiduciary capacity is compensation neutral. “You can be a fiduciary if you’re a commission broker or a fee-only planner,” he said, acknowledging as well that all business and compensation models contain within themselves “a potential for conflict.”
Both Auslander and Tuttle agreed that two pressing issues for the industry are practice management and succession planning. The FPA, Tuttle said, is putting “a greater focus on practice management, from A to Z” as well as how succession planning plays into that. Tuttle said an area where FPA “can excel” is in practice and business management, hoping to become a “go-to resource for financial planners and maybe others that can benefit from a professional standards standpoint.”
Auslander, however, lamented the fact that FPA is tackling the issues of succession planning and practice management within the group “maybe later than we should have.”
