FPA lobbies with group for 529 expansion to grow CFP pipeline

Wealth management research predicts a prodigious shortage of financial advisors in the coming decade. In a collective bid to stave off such labor problems, trade groups are going to D.C.  

The Financial Planning Association has joined over 500 other professional organizations and businesses as part of a group called Tomorrow's Workforce Coalition in advocating for the passage of a bipartisan bill called the Freedom to Invest in Tomorrow's Workforce Act, according to a press release Monday. The American Society of Association Executives and the Professional Certification Coalition are leading the alliance. 

The bill, if passed, would allow Congress to expand what 529 education savings plans can be used for. Postsecondary professional training, licenses and credentials — including the certified financial planner mark, which is considered by many to be a top credential for financial advisors — would be newly covered. Currently, the tax-advantaged 529 plans are only applicable to certain qualified education expenses, and they are most commonly used by families to pay for sending children to college. Less common uses include financing K-12 education, apprenticeship programs and vocational schooling. 

Read more: Five key tips for advisors on 529 college savings plans

"The bill would provide valuable tax-advantaged resources for families, students and workers—with or without a college degree—who pursue career growth, mid-career changes or pathways that diverge from a typical academic route," the FPA said in a statement in the release. 

As artificial intelligence increasingly changes the nature of employment, workers are likely to expect constant reskilling throughout their careers to stay competitive in any industry — making investments in professional development more likely to become an ongoing financial concern to plan around. At the same time, college has grown increasingly unaffordable in America. Students who do go often receive insufficient support and guidance around financing their educations and suffer high dropout rates — nearly a third of students drop out of college altogether, according to research last year by the Education Data Initiative. 

FPA

"We certainly need to be intentional about filling that gap of those advisors who are retiring, but also increasing the number of competent ethical financial planners to serve even more Americans than are being served today," FPA President James Lee said in an interview, referring to research by Cerulli Associates that found around 37% of financial advisors plan on retiring in the next decade, as of 2021. 

Read more: Advisors handling $2.4T of assets are retiring, as young talent flees the industry 

While anyone can technically call themselves a financial advisor, obtaining recognized industry certifications — which can cost, in the case of the CFP, thousands of dollars — helps establish credibility through the ethical standards that a client can expect from that credential. 

"This legislation will help individuals invest in their own professional development. … And that would include paying for their CFP credential," Lee said, adding that the FPA had been lobbying Capitol Hill in June and earlier in July for the bill. 

"This will lead to more CFPs being able to deliver the benefits of financial planning to more Americans …  middle-class Americans, and also those who have traditionally been underserved by the financial services industry." 

On July 24, the CFP Board issued a statement that supported the bill. 

CFP candidates do have to obtain a bachelor's degree to qualify for the certification, but it can be within five years of passing the licensing exam. 

Workforce development and bills to expand career pipelines into in-demand professions, including jobs not traditionally recruiting from college or graduate degree programs, are one of the rare areas of legislation where members of Congress still often collaborate across party lines. 

The Freedom to Invest in Tomorrow's Workforce Act was originally introduced in 2019 by Republican Rep. Rob Wittman of Virginia and Democratic Rep. Abigail Spanberger, also of Virginia, and was reintroduced this year in the spring. Wittman and Spanberger are still the leads on the House version of the bill; Democratic Sen. Amy Klobuchar of Minnesota and Republican Sen. Mike Braun of Indiana are the Senate leads. 

Read more: How planners say parents should prepare kids for the cost of college

"This enhancement would increase the appeal and flexibility of 529 plans and encourage more families across a broader spectrum of household incomes to save for postsecondary education in a Section 529 Qualified Tuition Program," the National Association of State Treasurers and College Savings Plans Network said in a statement supporting the bill.