There seems to be a lot of "energy" (and sometimes anger) around the idea that some people provide full-service financial planning and some people call themselves planners while actually selling products or managing assets for a living.  Jim Barnash of Capital Analysts, when he was president of the Financial Planning Association, reported to me that it became obvious that many FPA members who have been held up as the benchmark of the profession didn't do financial planning any more--and, he says, "those were often the ones who banged on 'those brokers and insurance guys' calling themselves financial planners.  His solution: if you don't follow the six-step process, then you shouldn't be able to call yourself a financial planner--period.  Otherwise, we are just muddying the waters around the issue.

But another advisor, who practices in Columbus, Ohio, isn't so sure.  Her plans, she says, have become more streamlined over the years; "more is often less," and the long, detailed financial plans can sometimes create confusion.  At the same time, she says, the written document provides a potential source for clarity, and a foundation for all recommendations, and a reference point for clients when they suddenly want to make changes in their portfolio. 

The implication here is that the plan (at least, the written part of it) should not exceed the client's patience or limits of understanding.

I was surprised at how many advisors are angry with the FPA for not taking a stand on this issue--and for some reason, most of them chose to send me private messages rather than go onto the message boards.  "Don't disturb those high-minded FPA Board members with tiring articles about how the middle class desperately needs access to real financial advice," said one commentator.  "Keep pointing out that the emperor has no clothes on and the FPA will soon marginalize you."

On the discussion board itself, I think we've identified some of the source of the anger.  The profession has done a poor job of defining the value of pure financial planning, or even really defined the scope of the service with the same precision as other recognized professions.  Until we do that effectively, clients won't be willing to pay for the service, and it will be much harder to sell the financial planning service--which, of course, is what creates so much frustration in the profession, and drives so many advisors to take the easy way out.

The way things are now, financial planners who offer the real service (defined as the CFP Board's 6-step process or otherwise fairly stringently) have to compete with salespeople who are doing needs-oriented selling and using financial analysis to point to a particular product in their suitcase, and asset managers who do pre-portfolio design analysis to construct a reasonable portfolio.  Both pretenders are probably doing more, and better, analysis than their peers.  But when they call what they do "financial planning," and call themselves financial planners, they are confusing the public and making it much harder for the real planners to charge appropriately for what they do--or articulate its value. 

Do you see a solution?  If we decide that only "real" financial planners can call themselves financial planners, who would police this?  How would we define "real" financial planning?  I have to admit that I don't see a good way to clean up the muddy waters around this issue, even though I can see why so many advisors are feeling so frustrated by this issue.

For a lot more information on practice marketing, practice management, client services, investment paradigms--and, recently, a full analysis of the SEC's new comment letter on "harmonizing" brokerage and RIA regulation, go to:




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