Is the CFP Board’s Umbrella Big Enough for an Advisory Profession?

With that said, the bigger question seems to be what the CFP Board really wants to be when it grows up: an organization for professional financial advisors or a certifying body for securities salespeople? To confuse the issue even more, it’s not even clear (to me, anyway) whether the Board even can be a professional organization, given the challenges it faces with the current ranks of CFPs. At the top of that list is a conflict that the Board has neatly sidestepped since its creation in 1985: How can registered representatives (who are legally required to represent the best interests of their broker-dealers) also be required to put their clients’ interest first (let alone have a fiduciary duty) as CFPs? (A friend of mine who is a securities attorney recently told me that it can’t be done.) Of course, the Board, in its zeal to attract more CFPs to “regulate,” has turned a blind eye to this serious conflict of interest, thereby placing at least one of its feet deeply into the sales camp.

To my mind, the Board’s schizophrenia (and therefore that of all CFPs), stems from its historical focus on a process rather than a profession. As long as the Board sees its “mission” to promote the six-step process of financial planning, it will be inclined to welcome a wide range of financial folks including insurance agents, stockbrokers, tax preparers, and bank employees, all of whom have conflicts that are antithetical to an advisory profession. As its history has shown time and again, the Board’s “big tent” marketing approach has made writing—and enforcing—true professional standards virtually impossible. 

While it’s still too early to call, the Dodd-Frank debate over broker/advisor regulation may have started the ball rolling for a true advisory profession made up of Registered Investment Advisors, with an unambiguous fiduciary standard and requirements to avoid or mitigate conflicts with their clients’ interests. If that happens, then the Board could go back to credentialing anyone who can fog a mirror, and truly professional advisors with, or without, a CFP would have a place to hang their hats. 

But until that becomes a reality, client-centered advisors such as Mr. Mendez will have to content themselves with getting a CFP designation and pushing the Board from the inside, and possibly helping to create a more professional umbrella under which to practice comprehensive financial planning.