The chairman of the Certified Financial Planner Board of Standard’s board of directors said it is expecting “double the normal attrition” as a result of an 80% fee hike to fund a national public awareness campaign.
“We are planning for the worst case scenario,” Robert Glovsky, the board’s chairman, said in an interview Friday. “We are worried that there will be fallout and we are planning accordingly.”
Dan Drummond, a spokesman for the CFP board, said the CFP Board loses just 3% of its certificants annually to attrition. "And while we did budget conservatively for a lower retention rate, we certainly have a much more favorable rate than most organizations," he said. "In fact, it wouldn’t be prudent of us not to make provision for an uptick in attrition as a result of the increase. That said, we expect and hope that attrition will be low once CFP certificants see the value of the public awareness campaign and how its reflects the value of their hard earned certification."
The board announced Friday that the public awareness campaign will cost $9 million annually and will be funded through a combination of funds from its reserves and an increase in fees. The CFP Board is contributing $9.3 million over two years - $7 million in 2011 and $2.3 million in 2012.
A monthly fee increase of $12 a month, or about $145 a year, which will be introduced in July, will pay the balance.
Kevin Keller, the board’s chief executive officer, mentioned it was considering this annual fee increase to $325 at the Financial Planning Association’s annual meeting in Denver last month. The idea generated a slew of angry responses on our message board. But the CFP’s board planned to move ahead despite the criticism.
“Honestly, we expected a higher number of peole to respond on blogs and comment on discussion boards about this,” Glovsky said. “We were surprised there weren’t more people upset about this.”
He added, “We are always concerned that people will say that the fees have reached a point that they can’t afford it anymore. We didn’t want to do anything that the vast majority of our certificants didn’t support, but our surveys indicate strong support.”
The board spent the “better part of three-and-a-half hours” discussing the fee increase on Thursday before unanimously deciding to move forward, he said. One major change was the board increased the amount it is paying from its reserve to support the public awareness campaign to $9.3 million from the previously discussed $6 million. “We really wanted to make the statement that this campaign is critically important to the profession.”
According to the CFP’s board’s research, 72% of certificants surveyed said they’d pay an extra $12 a month to support the campaign.
With the increase in fees, CFP certificants will now pay annually but still renew their certification every two years. The total annual certification fee will rise to $325 a year. The certification fee increase will go into effect starting with July 1. Currently, certificants pay fees every two years.
The public awareness campaign has been approved to run over the next four years, with a review period at the end of the second year. The board made clear in its deliberations that for the campaign to continue, it must be successful based on established metrics that demonstrate an increased awareness of CFP certification. The resolution also states that all funds stemming from the fee increase and allocation of reserves must be dedicated to the campaign.