Here is the truth, the excruciating truth, about most Americans' perceptions of financial planners: The profession is populated by wolfish financiers, specifically the type of figure personified by Gordon Gekko, the "greed is good" villain from the movie Wall Street, the CFP Board of Standards found in a recent study.
For financial planners who pride themselves on adhering to a fiduciary standard of care when dispensing financial advice, especially those who have earned a CFP designation, this can be hard to take. Fortunately a little education appears to work wonders.
When Americans hear what goes into obtaining a CFP-the requisite three years of work experience, 10-hour exam and continuing education study, and the quality of service expected from those that provide financial advice-their attitudes change. Suddenly financial planners are seen as well-educated, ethical, client-driven professionals who are good listeners and operate with integrity.
After being educated about the requirements for a CFP and the approach these planners take in offering financial advice, consumers say they are more likely to seek out a CFP for help with managing their money. These findings helped form the basis for a national public awareness campaign that the CFP Board will kick off next spring.
SPREADING THE WORD
The campaign will target affluent Americans age 35 to 64 with investable assets between $100,000 and $1 million, a group that tends to look for financial advice. The CFP Board aims to get its message out via print, television and online media, says board chair Robert J. Glovsky, president of Mintz Levin Financial Advisors.
Digital media offers opportunities for people to respond, is easy to track and maintain and is popular with the target market group, Glovsky says. The campaign will also run advertisements on national cable channels and in consumer magazines.
The CFP Board has authorized a four-year campaign, costing $9 million annually. It will fund the campaign with $9.3 million from the CFP Board's reserves-$7 million for 2011 and $2.3 million for 2012-as well as a certification fee increase of $145 per year, or $12 a month. The organization estimates that based on the 62,000 current CFP certificate holders, the fee increase itself will raise about $9 million annually to fund the campaign.
The CFP Board surveyed 7,000 CFPs earlier this year and found a vast majority support the public awareness campaign, even knowing it would involve a fee hike, the group said. A full 72% said they would pay the $12 a month to support a national public awareness campaign sponsored by the CFP Board.
The campaign seems to have a lot of road to cover, however. Most Americans today are almost completely unaware of what a financial planner does, why they might need one and that there are planners who undergo a rigorous certification process to become qualified at what they do.
"The public doesn't know the value of the CFP certification," says Michael Kitces, director of financial planning at Pinnacle Advisory Group, a wealth management firm in Columbia, Md. When people are aware of what the CFP mark represents, they tend to choose a CFP for financial advice. "They don't make the decision at that conscious level, but yes, it has an impact."
The group will evaluate the campaign as it goes along, with a formal review at the two-year mark. The CFP Board is still developing the set of metrics that it will use to judge the success of the campaign, says Dan Drummond, a spokesman for the board. However, the group says it is willing to end the campaign and the associated fees if it does not deliver the desired results.
THE INTERNAL IMPACT
The campaign-and its requisite fee increase-has already made a noisy impact on the profession. The increase represents an 80% hike over the current $180 amount levied annually on CFP holders. All told, CFP professionals will pay $325 beginning in July 2011, when most renew their certification.
The raw numbers do not seem like a lot in dollars and cents. A vocal minority of the CFP Board's membership, however, took issue with the steep run-up in their certification fee, which seemed to happen overnight and which some deemed unnecessary. "We pick up 10 to 20 new clients a year," says Keith A. Tyner, CFP, a financial consultant at Gimbal Financial, a financial planning firm based in Fishers, Ind. "Our clients and suppliers refer business to us. That is how we get most of our new business."
Some advisors, like Jim D. Pinkston, CFP, also a financial consultant at Gimbal Financial, believe the CFP Board ought to promote the CFP standard more rigorously at the academic level. "Make it something you could graduate with," Pinkston says. "If the Ivy League schools offered the major, how many other schools would follow?"
Few college students know they can study financial planning in college, says Vicky Hampton, a professor in the division of financial planning at Texas Tech University, in Lubbock, Texas, which offers one of the largest academic programs in financial planning in the country, including bachelor's, master's and PhD degrees. According to the CFP Board, there are 328 registered financial planning collegiate programs. Of that number, 188 are certificate programs, 96 offer bachelor's degrees, 39 confer master's degrees and five grant PhDs.
For its part, Texas Tech has many financial planning students each year. "I'm hoping we'll attract more bright young people who want to do this, because it is a great profession," Hampton says.
Glovsky acknowledges the influence that academic programs have on promoting financial planning as a profession and says the CFP Board is committed to highlighting them as well. The public, however, is still largely unaware of the services that are available to them from CFP holders, or of the high standards that CFPs adhere to on a daily basis.
"There is confusion on the part of the consumer," Glovsky says. "They cannot differentiate between the qualifications and a fiduciary duty [and suitability] and who is under it." The campaign aims to educate consumers about CFPs, so that they can start to tell the difference between the menagerie of professionals offering financial advice and show a preference for CFP holders.
RITE OF PASSAGE
Kitces and others say that the campaign will help financial planning define itself as a full-fledged profession on par with accounting, law and medicine. "A profession has serious requirements for obtaining a body of knowledge," he says, "and the campaign will demonstrate to Americans that they need to hire someone with the requisite knowledge to be a CFP."
Achieving parity with other professions isn't the campaign's primary goal, Glovsky says, pointing out that most professions took hundreds of years to gain legitimacy. But the group would, of course, be happy if advisors gained more standing in the eyes of the public.
Kevin Keller, CEO of the CFP Board, says that four years ago he saw how important it was to some industry leaders that financial planning be recognized as a profession. The industry has many of the ingredients already, he says, including a body of knowledge, a code of ethics and a commitment to offering services on a pro bono basis. "Until the public recognizes that we are a profession, I would suggest we're in the emergent phase of becoming one. The campaign is designed to raise that awareness."