FPA to fold all 88 local entities into one
Aiming to create a streamlined experience for its members nationwide, the FPA plans to wrap up all of its 88 chapters around the country into a single legal entity, starting in 2020.
While the move is part of a plan that has been in the works for five years, it follows on the heels of a bitter battle in New York City that may have placed greater urgency on the issue.
In March, the national body moved rapidly to dissolve its affiliation with the FPA of New York over allegations of fiduciary breaches, involving prohibited self-promotion and client prospecting, by chapter leaders.
In ending its relationship with the local association, the national body created a new entity under a new name, the FPA of Metro New York, wholly under its own control.
Even if under adverse conditions, the shift to national ownership of one of the association's highest-profile groups has become a de facto test case for what other chapters might expect nationwide from the broader transformation, chapter leader Scott Kahan says.
He believes they have nothing to fear.
"For us in New York, it's been working fine," says Kahan, who the FPA asked to step in and take over the new New York group. "We've been doing whatever we want to do in New York."
Members there still organize their own programming, but go to national for time-consuming tasks, such as expense reimbursements that they used to handle themselves, he says.
"It's something that should have been dealt with many, many years ago," he said. The national FPA wants "to be able to really be an organization for the 21st century."
Kahan attended a national meeting of FPA chapter leaders in Denver last weekend, the 2018 OneFPA Chapter Leaders Conference, where plans for building a OneFPA Network were announced.
Back in 2013, FPA leaders at the local and national level began discussing how to create a more unified national structure for the organization, which has 23,000 advisor-members in all of its chapters, down from a high of 28,000 in the mid-2000s, according to FPA spokesman Ben Lewis.
Many advisors have long believed that having nearly 90 separate legal entities — with separate accounting, website-management and membership tracking systems — produced an inconsistent and suboptimal experience for advisors.
In parts of the country, some advisors felt a stronger connection to their local chapters and didn't know a national body existed, while advisors elsewhere only engaged with the national FPA, based in Denver, says national CEO Lauren Schadle.
By offloading accounting, legal, tax-filing and other operational tasks, the FPA of Greater Kansas City will be able to focus more energy on activities that most interest its members, says the chapter's president, George Fernández.
"I've been wanting to see this happen," he says. "For some time, we've felt there has been a disconnect for us and the national organization."
The kinds of problems that afflicted New York — which were the subject of conversation at the conference last weekend — could be avoided by this shift, he thinks.
New York volunteer officials had collected client leads at public information events and given members of the public their personal business cards, in violation of the chapter's rules prohibiting such activity, according to then-chapter president Devikah Kamboh, a planner in the city.
FPA rules currently forbid members nationwide from directly prospecting for clients during events they hold with the public, according to Kahan.
However, in New York, apparent confusion over these rules allegedly led at least one chapter volunteer to collect and distribute client leads from chapter events to board members.
Alarmed at the behavior and the response of fellow board members who she says resisted her moves to put a stop to it, Kamboh filed a complaint against the chapter and her fellow volunteer leaders with the New York Attorney General's Charities Bureau.
Via email, Kamboh said she was not immediately available to comment on the status of the case. The charities bureau did not immediately respond to inquiries.
In the spring, Vincent Barbera, FPA Philadelphia's 2017 chairman, said rules against improper client solicitation are important to prevent public events from devolving into sales free-for-alls with FPA members whispering, "Call me," into attendees' ears.
"Take that sip of whiskey and the next thing you know you are downing bottles," Barbera said at the time. "As leaders of our chapters, we need to be held to that standard."
Requiring all FPA volunteer leaders nationwide to undergo the same training about solicitation annually is a change Fernández would welcome. In Kansas, he says, "each time the board rotation took place, each new board member had to restart the process. It's us having to retrain ourselves all the time."
Although training about the fiduciary treatment of clients – in which advisors learn to place their clients' financial interests ahead of their own – can be repetitive, that repetition plays an important role by reminding advisors of their duties, according to Fernández.
"Most people don't make a conscious decision to get themselves into trouble," he says. "Most times, it just happens."
Using a consistent training module, he says, "from national's perspective they can say, here's what we'd like you to do."
National also could provide chapter leaders with their own FPA business cards, to be used in place of advisors' personal business cards, which they are not allowed to distribute at FPA events.
As volunteer officials "we represent FPA," he says. "We don't represent the firms that we all collectively work for. [Now] national could say, 'That is part of our responsibility. We will send out a business card for every new official.' "
The tasks that national will and will not handle for the chapters have yet to be determined, according to Schadle.
FPA national leaders already are planning several meetings around the country to listen to their regional counterparts' concerns and hopes about the changes, which are not expected to begin taking place until 2020.
While some advisors probably fear national is taking over, Kahan doesn't think it is.
"I'm sure they don't want to micromanage all the local chapters," he says. "What they are wanting to do is take this organization to the next level."