Associations in Motion

Belonging to an industry or professional association may become more valuable in the coming year, and the environment will become more complex.  Here’s how the three most prominent advisor associations are pivoting to meet the challenge.

There are years that send clients scurrying into the arms of advisors, when a severe downturn has do-it-yourselfers questioning their astuteness at navigating the markets.  So too are there years when advisors realize that they may not have all the answers, and seek the comfort and support of a community. 

The year just past was one of the latter.  Advisory firms had to cope with existential questions about how to maintain a corporate culture when everybody was working outside the office, and how to maintain client relationships when in-person meetings were suddenly off the table.  Beyond that, there was a lot of new advice-related complexity around economy-supporting Congressional initiatives like PPP and the tax provisions in the CARES Act.

Just like bear markets tend to be, ultimately, boom years for advisors, years like 2021 could see a rise in the importance of the advisor communities that we call industry associations.  And, of course, those associations are adapting to the new realities of online vs. in-person meetings and the desire for more interaction with other members. 

As advisors begin to lean more heavily on their associations and the connections they have with other members, I asked the association leaders what they’re seeing and what’s on their 2021 agendas.  The goal is to help readers who have not yet joined a community find a good association home, and for those who have, to know what to expect in the coming year.

FPA: Turning the corner

Incoming Financial Planning Association (FPA; https://www.financialplanningassociation.org/) President Skip Schweiss left his position at TD Ameritrade (both Managing Director of Retirement Plan Solutions and also the company’s advisor advocate) last August just before it was formally acquired by Charles Schwab & Co.  Since then, he has obtained his CFP designation.  He plans to re-enter the workforce as CEO of a financial planning firm that needs to bring in professional management, but for now his full-time responsibilities are to the FPA.

It’s a time of transition for the organization, which moved on from ex-CEO Lauren Schadle, who oversaw a decline in membership and a disastrous rollout of the OneFPANetwork initiative, and recently selected interim CEO Patrick Mahoney to lead the organization going forward.  Schweiss says that the goal is to make the FPA more attractive to the growing community of advisors.

“We lost a third of our membership in the last 20 years,” he says.  “It goes without saying, that is not a sustainable path.”

The first step was a full-board listening tour, with the goal of identifying why the current members had joined and remained.  The members offered a variety of reasons.  “We found that some people join the FPA for the discounts on insurance and software products,” says Schweiss, “while others do it for the chapter networking and programming.  Others are in it for the CEs, and others cite the Journal for Financial Planning”—the association’s professional journal which shifted from physical print copies to an online format in 2020.

Schweiss says that the most consistent response he’s gotten had to do with belonging to a community of professionals.  “Many of the people I’ve talked with told me that they were a better planner because they belonged to the FPA,” he says.  “They have colleagues to lean on, they can go on FPA Connect and get answers to their clients’ quirky planning challenges, and they can compare notes at the chapter level.” 

One might think that, once chapter meetings shifted to virtual last March, this last benefit would have diminished, but Schweiss says that, against all logic, the opposite seems to be true.  “Chapters are telling us that their virtual chapter meetings are getting greater attendance than they got at the physical meetings,” he says.  “Apparently some people never felt like they had the time to drive across the city in urban traffic to attend in-person meetings.  But now they can join in remotely.”

That, in turn, suggests one of the biggest initiatives that the FPA will address in 2021.  “I still think physical meetings will occur in the future,” says Schweiss, referring to that as-yet-to-be-determined time when the pandemic is behind us.  “But our eyes have been opened to the possibility of virtual attendance.  For people who don’t want to get in a car and drive to the chapter meeting, or who don’t want to get on a plane and stay in a hotel to go to the national meeting (September 22-24 in Minneapolis, MN) or Retreat (Not yet posted on the FPA website), we can offer them access to that content virtually.”

Meanwhile, many FPA chapters have strong NexGen communities, and the annual NexGen conference (Not yet posted on the FPA Website) has been a highlight for the association’s younger cohort.  Perhaps the organization’s biggest 2020 success was the eight-week-long Virtual Externship program, which was created on the fly when it became apparent that thousands of college students in planning programs around the country would no longer be able to spend a couple of months getting real world experience by working in planning offices.  The Virtual Externship gave a total of 1,950 students virtual hands-on learning experiences from a faculty of advisor subject matter experts around the country.  If COVID recedes, the externship will morph into a program that connects students with planning firms in 89 FPA chapters.

The FPA will hire a Director of Education early in the year, and one of the first items on this person’s agenda will be to work with volunteer advisors to build career resources.  “We want to be there to help guide a new advisor from the time they’re a planning student in college to becoming a new planner to eventually running a practice and having a group of clients, to eventually becoming a leader in the profession,” says Schweiss.  “In 2021, we’re going to be building out content and education throughout that career journey.”

Meanwhile, at the start of the year, the FPA Board will be meeting with the organization’s diversity and inclusion committee to create an agenda that would attract more diverse advisors into the profession, and also to ensure that the board and committees reflect the diversity in the U.S. population.  “Sometimes I feel like these are baby steps,” Schweiss admits.  “But I think it helps if we can get diverse backgrounds in the room to generate ideas that can move the ball up the court more effectively.”

The FPA will also be hiring a new editor for the Journal, which Schweiss says consistently comes out at or near the top of member benefits in member polls.

The current FPA membership is much more varied than the other organizations profiled here; roughly 80% of the members have the CFP designation, and the rest are either planners who don’t have the credential or allied professionals who might be representatives of software or investment product companies, or attorneys or CPAs who work with advisors.  The members may be compensated by fees, commissions or both; the organization is compensation neutral.

Schweiss is guardedly optimistic going into the new year.  “It is going to be a difficult environment,” he predicts, “and I think we’re going to spend much of the year reinventing our value proposition and strengthening the things that people value today.  Twenty thousand members is not bad,” he says.  “We still have the largest membership in the financial planning world.  But the world is changing, value propositions are changing and we need to get the member value broadened so we can turn that membership curve around.”

NAPFA: Community first

The National Association of Personal Financial Advisors (NAPFA; https://www.napfa.org/) is a big beneficiary of the trend from commission to fee compensation; over the years, it has positioned itself as the logical home of the fee-only planner, and zero members accept commissions.  The organization has experienced a 7% annual growth rate in the last couple of years, and attrition is below 2%, the result of either the death of a member or smaller firms being sold to larger firms which accept some kind of commission revenue and thereby render the advisor staff ineligible for NAPFA membership.  As of the end of November, the organization had 4,038 members.

Because every NAPFA member is fee-only, the association is able to create a more cohesive culture than any of the other organizations profiled here.  “It’s very obvious who we are and what we are,” says incoming President Lydia Sheckels, of Wescott Financial Advisory Group, headquartered in Philadelphia.  “Nobody will ask you about how much production you had last year.”

Sheckels says that NAPFA’s biggest challenge this year is maintaining that sense of community now that people aren’t able to meet in person.  “This is a challenge for onboarding new board members and helping them see what their role is,” she says.  “But it’s also about new NAPFA members.  How do they make that connection to this organization without having those in-person opportunities to make friendships?”

Of course, a part of that challenge falls on the organization’s annual conferences: spring (tentatively scheduled for May 5-8 in San Diego) and fall (more confidently scheduled for October 13-16 in Boston).  Sheckels says that NAPFA is preparing for dual attendance: some will be in the audience in person, while others are attending virtually.  “That can be a very good thing,” she says, “it will let us include many people who don’t have the resources or the infrastructure to get away from the office for three or four days.”  NAPFA CEO Geoffrey Brown says that the challenge will be to replicate some of the less tangible aspects of the in-person experience.  “With virtual, you have content going out, but you lose the interactivity,” he says.  “We haven’t figured out the right way to reproduce the hallway conversations.”

There may be precedent for that challenge, however.  NAPFA’s community culture also includes 45 study groups that the organization helps to organize, who hasn’t been able to meet in person for nine months but are still providing value to each other virtually.  NAPFA is studying the way they’ve maintained their connections, with perhaps an opportunity to create breakout study groups among virtual conference attendees.

“I think as we look to the future, we’re going to see virtual conversation circles, where you have facilitated discussions among 20 or 30 members,” says Brown; “where people feel the opportunity and freedom to engage with one another, where there’s no CE.”

This ties in with one of Sheckels’ personal agendas this year: to help newer members raise their level of competency.  NAPFA members are not only fee-only; the membership criteria also requires them to offer comprehensive financial planning services to their clients—and this is enforced through a requirement that all prospective members must either submit a financial plan (and students can submit their Capstone course plans) or go through a peer review process.  Either way, their financial planning competency is evaluated to see whether they qualify for membership. 

“Any consumer who works with a NAPFA member should feel confident that they’re working with a fee-only fiduciary who is competent and provides comprehensive, holistic planning,” says Sheckels.

Of course, creating a financial plan is not financial planning.  “We can boost the collective wisdom of our members without being in-person,” says Sheckels.  She points to the virtual presentations, but also the Engage community, which is currently the most active online discussion forum in the planning space.  NAPFA also requires twice as many annual CEUs as the CFP Board or the FPA.

Of all the organizations in the Financial Planning Coalition (the FPA and the CFP Board are the other participants), NAPFA’s membership experienced the most consternation when the Securities & Exchange Commission decided to water down the fiduciary requirement for advisors, and replace it with the infamous Reg BI.  “When I listened to the hearings,” says Sheckels, “I remember one commissioner just blatantly said, ‘we can’t kill the commission world.  We can’t kill the brokerage industry.’  It wasn’t about protecting the consumer; it was finding ways to favor a particular industry.”

Advocacy in Washington focuses on the idea that RIAs should be fiduciaries, and anyone who holds out as a financial planner or advisor should meet strict standards.  Key to that is to make it easier for the consuming public to recognize that brokers are held to a different regulatory standard than RIAs, and to allow brokers to continue their own offer—to meet sales standards—so long as they hold out forthrightly as reps and agents.  NAPFA is also strongly in favor of strengthening fiduciary requirements for everyone who holds out as an advisor.  The lobbying efforts are led by former SEC attorney Michael Watkins, who serves as a retained consultant.  “That gives us better expertise and more mileage than if we had someone on staff,” says Brown.

In lobbying matters, the Coalition speaks with one voice, but Brown says that NAPFA has been effective at pushing its coalition partners toward a stronger fiduciary stance, and to push for higher standards overall.

NAPFA has also unveiled a new diversity initiative.  On December 15, a new downloadable PDF guide appeared on the NAPFA website, which includes a workbook that firms can use to start a dialogue within their firms.  There are videos that firm founders can share with their staff.

The initiative that gets the least attention from outside observers, but may be the most important for NAPFA’s future growth, is a continuing outreach to larger firms, focusing on their needs, including education on M&A activity and more advanced management issues.  NAPFA’s 2020 Large Firm Forum in Scottsdale, AZ was the last in-person event in the profession, exclusively for advisors and principals with planning firms with more than $1 billion in AUM.  (The event is by-invitation-only.)

But bigger picture, NAPFA stands apart from the other organizations profiled here in another way: the organization has historically been a bit cautious about pursuing an aggressive growth strategy.  Preserving the fiduciary, full-service planning culture is a more important objective.  “We’re more focused on engagement than growth,” says Brown.  “We are continuing to make the case to people who elect into fee-only and comprehensive planning that NAPFA is their professional home.  But we want to continue to have that sense of community.”

“I think people become NAPFA members because of peoples’ willingness to share what they’ve learned with each other,” adds Sheckels.  “NAPFA members are willing and even eager to explain to you what they’ve learned and what they’ve tried, and what didn’t work out as well, and what they’re working on now.  It’s a very intangible thing to try to explain to somebody,” she says.  “But you can feel it.”

AICPA FPP Section: Opportunities abound

Of all the organizations profiled here, the AICPA’s Personal Financial Planning section (https://www.aicpa.org/interestareas/personalfinancialplanning/membership/pfp-members.html) undoubtedly has the most growth potential.  “Our membership is just over 11,000 members,” says section Director Dan Snyder, “and there are a little over 4,000 members who have the PFS designation.  But,” he adds, “there are over 120,000 CPAs who are doing financial planning in one fashion or another, either having those conversations with clients as they do tax work, or formally doing planning work as part of a tax practice.”

Snyder moved into the leadership role in August, though he is no stranger to the organization, having started there in 2007 after a career in the 401(k) field, most notably as the product manager for the Paychex 401(k) retirement plan for small businesses.  He is also a CPA and holds the PFS designation.  One of his 2021 initiatives is to entice some of those 120,000 prospects into the section by structuring the fees differently, by making it more attractive to access the benefits through membership rather than a la carte. 

Those benefits right now prominently include the ENGAGE Conference (June 7-10 in Las Vegas), where tax and estate professionals have their own separate tracks alongside the financial planning sessions (there are also audit-related presentations), and many attendees will mix and match between tax, estate and planning.  The conference provides the best technical content in the planning space.

In addition, the section offers highly-detailed tax- and estate planning-related webcasts and podcasts twice a month, presented in many cases by nationally-known subject matter experts.  Those can be attended a la carte at present, and attendance has picked up among members and the CPA community at large.  “This past year has been great in that regard,” says Snyder, “because we’ve been able to focus on those COVID-related tax items, the PPP and the tax implications and the changes in the CARES act, and how all that impacts the business and individual side of clients’ lives.”

Exclusively for members, and free to members, are a range of in-depth guides.  The list is long and somewhat distinguished: a four-volume financial and estate planning guide written by subject matter expert Steve Segal; Jim Shambo’s 3-volume guide to all the research into retirement planning, with Shambo’s observations on how to apply it all to real client situations; a Social Security planning guide written by Ted Sarensky, and a Healthcare Planning guidebook written by Jim Sullivan, who specializes in working with clients suffering from chronic illnesses.  T3’s Joel Bruckenstein helped create the section’s technology guide, and there are a variety of guides on how to create and manage a financial planning practice, which are popular with CPAs who want to expand their tax practices into the broader planning field.

Like the other organizations profiled here, the AICPA plans to offer its ENGAGE conference virtually, and in fact the team is working on two conferences at once; the in-person event with virtual access, and an all-virtual event in case the virus is still rampant in June.  Another conference, the Personal Financial Planning Summit (January 25-26), will be all-virtual this year, offering client service/practice management content that is a contrast to the highly technical presentations at ENGAGE.

The marketing plan for 2021 is very straightforward.  “Our focus is on helping CPAs who are doing tax planning and having these planning conversations on an informal basis to understand the importance of their planning advice, and the real value-add that planning gives their clients,” says Snyder.  “If they can learn to anticipate what the clients’ needs are going to be, and connect their advice to their clients’ lives, it creates opportunities to have deeper client relationships and really build on the trust they already have from a CPA perspective.  “And,” says Snyder, “it also benefits the lives of their clients in meaningful ways.  It’s not just about the numbers, and it is certainly not just investments or a product orientation,” he adds.  “It is a huge opportunity to help clients.  The desire and need for planning is going to accelerate, and we think, CPAs are well positioned for that.”