The CFP Board has faced some controversy as it launched its new Center.  But it could be the key to creating a real profession.

Financial planning has a long way to go before it becomes a recognized profession (like doctors or lawyers).  But building a profession is (or should be) the overarching goal for the planning community as a whole. 

Why?  From a purely selfish standpoint, it’s far more valuable to belong to a profession than to an avocation that the public poorly understands and that virtually any fool can participate in.  Looking at it from a consumer protection standpoint (which many advisors do), creating a profession build reassuring clarity around minimum standards of practice, education, experience and quality of care.

If you agree, then there are two questions to consider.

Question 1: What needs to happen for the existing community to evolve into a true profession?

The agenda would certainly include a body of regulations specific to the profession, which would prevent any random Tom, Dick and Harriett from calling him/herself a financial planner.  The regulations would ideally set clear standards of practice for everybody to follow.  If your primary business activity is to sell insurance, gather assets or peddle CDOs that are misplaced and mis-credited, then you would be clearly labeled as something other than a professional financial planner.

In addition, there should be minimum educational requirements, including a small number of recognized designations that you would have to achieve in order to belong to the profession. 

There would need to be a recognized body of knowledge that professionals would be expected to master.

Achieving profession-hood would require us to find ways to get nearly every college and university to include a designated financial planning curriculum in their coursework, just like colleges today have accounting, pre-med, pre-law and medical and law schools.  Hopefully, someday, colleges will routinely feature a School of Financial Planning.

Also on that increasingly wishful agenda: creating a well-defined career path for financial planners—something more than “sit in on meetings and handle back office chores for a few years and we’ll see how soon I feel like I can trust you to meet with my clients.”

Finally, to evolve into a profession, we have to address the strange gender imbalance in the planning world, where only 23% of CFP practitioners are women.  We might also systematically address some pretty blatant ethnic disparities, where only 1.7% of CFP planners are African-American, and another 1.7% are of Hispanic background.  The profession needs to be recognized as a viable career path by Americans from every segment (and gender) of our society.

Question 2: Which organizations, currently, are attempting to make progress in these various areas in a conscious, systematic way? 

In some areas, this is easy to answer.  Certainly the first issue is being addressed by the various Financial Planning Coalition members, who managed to tamp down the internal squabbling so they could apply a unified voice to efforts to lobby Congress, the SEC and sometimes the states. 

The minimum education issue has long been addressed most directly by the CFP Board with the CFP designation, and more recently by the AICPA with its PFS designation.  I have reason to believe that the CFA Institute is prepared to have a role in that effort as well.

The AICPA has ethical standards going back 50 years, and the CFP Board has devoted a great deal of time and energy to evolving its own Standards of Professional Conduct.  Embracing the fiduciary standard, rather than holding it suspiciously at arm’s length, goes a long way toward making the CFP community more professional in the eyes of the public.

So the first two questions can be narrowed down to: Outside of lobbying, standarding and credentialing, in what ways are we making progress in the other areas and who is leading the charge?  And how should we proceed? 

I think we can agree that those other issues aren’t likely to be resolved by individual efforts by individual planners.  These big picture objectives are exactly the sort of thing that only a professional organization could hope to address, with the economies of scale granted by membership or professional dues. 

At the moment, there is only one organization that is chartered with the mission of figuring out what else is needed to nudge financial planning into professional status, and of going out and doing those things.  “When we launched the Center,” says Marilyn Mohrman-Gillis, Executive Director of the CFP Board Center for Financial Planning, “the mission was based on some fairly extensive research that we did, looking at what are the unmet priorities of the financial planning profession.”

Gender Diversity

In her previous role, Gillis was deep in the trenches of some key aspects of the profession-building effort.  Her day job was to function as the CFP Board’s Director of Public Policy, the de facto leader of the Coalition’s lobbying efforts.  Wearing another hat, she also took on staff leadership of what was then known as the Women’s Initiative, which, for the past five years, has attempted to encourage more women into the profession, and to help them enjoy more successful careers once they arrived. 

She participated in the fact-finding effort to define what else needed to be done to round out a conscious profession-building process, and the Center was officially launched in November of 2015.  By January of 2016, Mohrman-Gillis’s various roles with the CFP Board had been handed over to two separate job titles—Vice President of Public Policy, now handled by Maureen Thompson, and Chief Operating Officer, handled by Elizabeth Stewart.  Mohrman-Gillis was installed as the leader of the Center.

She acknowledges that many advisors in the community are wondering what, exactly, the Center is up to.  “We’ve tried to explain our mission, but I’m not sure everybody is hearing it,” Mohrman-Gillis says.  And, she adds, part of the problem is that there are so many components to the Center’s mission that it’s sometimes hard to see its bigger picture.

Let’s start with gender diversity.  Each of the Center’s initiatives are coordinated with generous input from an advisory group, and the 2017 Women’s Initiative Council is chaired by Nancy Kistner of U.S. Trust, Bank of America Private Wealth Management, and includes Charlotte Beyer of Principle Quest Foundation; Jennifer Brase of Northwestern Mutual; Kate Healy of TD Ameritrade Institutional, Kate Holmes of the Financial Planning Standards Board; Dr. Ruth Lytton of Virginia Tech University, Elissa Ellis Sangster of the Forté Foundation; Lazetta Braxton of Financial Fountains; Mindy Diamond of Diamond Consultants; Mary Beth Franklin of Investment News; Live Freeby of Brighton Jones; Kathleen McQuiggan of Artemis Financial Advisors; Karen Schaeffer of Schaeffer Financial; and Evelyn Zohlen of Inspired Financial. 

To get things rolling, the Council commissioned a white paper which found, among other things, that fewer women than men are aware that financial planning careers exist—only 22% for American women, vs. 53% of men.  Even women who were aware of the profession tended to know little about what it would take to become a successful financial planner. 

When the questions were asked of students in finance-related majors, 60% of male students were interested in pursuing a planning career, compared with only 25% of the female students.  Digging deeper, the researchers found that even finance-career women tended to see financial planning as a sales, investment and mathematical career, rather than primarily about communication, relationships and holistic advice.

The gender white paper also points to gender bias and discrimination in the workplace.  Interviewing women who have made financial planning a career, it found that, in their experience, a number of firms are less likely to hire and support women in key roles.  Of course, this creates a feedback loop; women are less likely to pursue a career in financial planning because they perceive (rightly or wrongly) that they won’t be hired and supported.

Women also expressed concerns about work-life balance in the demanding financial services business.  And they said that they lacked visible role models of successful women, who they could network with and seek out as mentors.  And both men and women respondents noted that women have tended to be less aggressive in pursuing their own interests and moving their careers along than men.  Just 39% of the female advisors surveyed owned all or part of their practices.  The comparable number for men: 63%.

The solutions that the CFP Board have come up with so far are likely to disappoint anyone who wants to see direct and immediate action.  “The goal is to educate young people about what a great profession this is,” says Mohrman-Gillis.  This doesn’t involve paid advertising; instead, the Center is relying on volunteers in the community to spread the word—and based on the registration form on the Center’s website, you must be a CFP practitioner in good standing to participate.   

The Center has created a “WIN Toolkit” that includes two slide presentations that any advisor can present to female audiences, one entitled “Opportunities for Women in the Financial Planning Profession,” and the other “Making More Room for Women in the Financial Planning Profession.”  There’s a sample presentation proposal letter and fact sheet, and if you give this presentation yourself, you can leave behind brochures entitled “A Great Career for Women.”  If you prefer emailing to presenting, the Center makes available some short YouTube videos illustrating success stories that the Center makes available. 

To date, says Mohrman-Gillis, about 400 people have signed up to use the toolkit.  (You can find these materials here: https://www.cfp.net/about-cfp-board/cfp-board’s-women-s-initiative-(win)/what-you-can-do-now/win-advocate

A more direct career facilitation program is the mentorship program, where female planners can go to the Center’s website and identify women CFP professionals who have volunteered to serve as mentors.  “To date, we have 700 mentors who have signed up and are available to mentor,” says Mohrman-Gillis, “and over 1,500 engagements, where mentors are working with mentees.”  The program will be expanded in the next few months, to include pictures of mentors and more information about mentors and prospective mentees.

Racial Disparity

The Women’s Initiative, with its 5-year head start, is well ahead of the Center’s racial and ethnic outreach program, which now has its own white paper evaluation of the challenges the Center is facing, and which will hold its own “Diversity Summit” October 23 at The Times Center in New York City.   

The Diversity Advisory Board is chaired by Cy Richardson, who also happens to chair the National Urban League.  His board members include Louis Barajas of Louis Barajas, Inc.; Danielle Beyer of the New American Alliance; Kate Healy of TD Ameritrade; Gerald Loftin of the Association of African-American Financial Advisors; Phuong Luong of Just Wealth, LLC; Jorge Quezada of Northwestern Mutual; Gary Rozier of Ariel Investments; Lazetta Braxton of Financial Fountains; Catalina Camoscio of Prudential; Marguerita Cheng of Blue Ocean Global Wealth; Rianka Dorsainvil of Your Greatest Contribution; Roberto Fernandez of the MIT Sloan School of Management; Leslie Tabor of Charles Schwab; Kara Underwood of Morgan Stanley, Jocelyn Wright of the American College; and Jamie-Clare Flaherty of The Obama Foundation.

They have their work cut out for them.  People who don’t believe there are racial or ethnic prejudices in our society might be startled to learn that three times as many respondents to the Center’s survey believed that white candidates were more skilled than the number who believed black candidates possessed more professional potential, and the disparity was greater when the same questions were asked about Latinos. 

This set of (what else can you call it?) prejudicial views manifested in hiring practices that didn’t overtly discriminate based on color or heritage.  Instead the hiring firm would cite “lack of fit” as a way to disfavor racial/ethnic minority candidates.  Among black advisors who participated in the survey, 27% said that companies were reluctant to hire or promote people like them.  At the same time, 58% of white anglo participants thought the problem was that people of color were reluctant to “pursue opportunities” in the planning profession.

Finally, the survey found that almost half of African-Americans who otherwise might be good client candidates are unaware that the financial planning profession even exists.  This becomes more understandable in light of perhaps the oddest graphic of the survey, where advisory firms reported that 76% of their clients are white, 9% black and 6% Latino.  We are almost certainly seeing a feedback loop: certain ethnicities are unaware of the services of financial planners, don’t hire financial planners, and are unlikely to pursue a career in this unfamiliar or invisible profession. 

The white paper doesn’t offer any prescriptions; it simply concludes, at the end, with the cheery statistic that 60% of black CFP professionals and 62% of Latino CFP professionals are very satisfied with their current careers.  Those who manage to get past the barrier of unawareness and “lack of fit” seem to be enjoying their work.

So what IS the Center doing to address the lack of racial and ethnic diversity?  So far, the solution seems to be donor-funded scholarship programs.  “We’ve already given out 20 scholarships,” says Mohrman-Gillis.  “And we’ve added two other scholarship funds; the Dick Wagner Scholarship Program and we’ve just announced that Envestnet has invested $500,000 in scholarships for the next five years.”

Of those four initiatives, however, only one will help students of color go through a college or university program.  The others are focused on helping people afford certificate programs.  “Right now, the investment is focused on people who may already have their BA degree, but want to get the additional education needed for CFP certification,” says Mohrman-Gillis.

Nor is the CFP Board or the Center investing any of its own money in scholarships at this time.  “We’ve dedicated resources toward fund raising and administrative expenses,” Mohrman-Gillis explains, “so that every dollar we raise can go into the programmatic initiatives that are featured in the annual report.”

Is there any similar inclusion of Asian-Americans in the racial/ethnic outreach?

The short answer is no.  “Our decision was that we needed to start someplace, and we needed to start in a place where there might be higher barriers,” says Mohrman-Gillis.  She notes that, currently, Asian-Americans make up about the same percentage (3.5%) of CFP certificants as black and Hispanic CFP planners combined.

Next on the agenda is help in facilitating minority careers.  African-American and Hispanic advisors will be invited to participate in a mix and match mentorship program that is under construction, similar to the one created for female advisors.  “We’re in the process of recruiting CFP professionals of color,” says Mohrman-Gillis, “so if black or Latino prospects in the pipeline wish to work with someone like them, from their own racial or ethic community, they’ll be able to choose a mentor from the site.”

Career Development

Building a profession also, as noted earlier, means building recognizable careers for the individuals who join the profession.  What is the Center doing on this front?  The Center’s Workforce Development Advisory Group is chaired by Mark Tibergien, of Pershing Advisor Solutions.  It includes Dr. Luke Dean of Utah Valley University; Kate Healy of TD Ameritrade; Alan Moore of XY Planning Network; Mark Wearing of Dowling & Yahnke; Paul Shane of Northwestern Mutual; Audra Bohannon of Korn Ferry Hay Group; Yusuf Abugidieri of Yeske Buie; and Roy Diliberto of RTD Financial Advisors.

What initiatives has the Center undertaken so far?  “We’re doing research toward a series of publications,” says Mohrman-Gillis, “where we’re going to be highlighting the return on investment for firms that put in place career paths for financial planners.  The idea,” she adds, “is that making an investment now will help them build a sustainable practice going forward.”

The research will also provide creative ideas for attracting, onboarding and training new financial planners.  Such as?  “There’s a consulting firm called iRelaunch (https://www.irelaunch.com/) that helps professionals who have dropped out of the workforce in the STEM area (science, technology, engineering and mathematics)—mostly women, mostly to raise children—by providing internships with firms to encourage those professionals to come back into the workforce,” says Mohrman-Gillis.  “We have a couple of pilot programs going using their ideas, and just last week one of the interns was offered a full-time position.”

Academic Respect

A profession also needs a body of knowledge, and to become a universally-recognized academic discipline at colleges and universities around the country.  Here, Mohrman-Gillis hands the baton to Dr. Charles Chaffin, newly-published author of Client Psychology, CFP Board’s Director of Academic Programs and Initiatives.

Chaffin says that the Center is addressing the body of knowledge challenge and the academic challenge together—in several ways.  The first is the annual Academic Research Colloquium, which is basically a conference where academics present research papers and exchange ideas.  The second Colloquium took place February 20-22 in Arlington, VA; the third is planned February 19-21, 2019 at the Renaissance Arlington Capital View Hotel in Arlington, VA, to be immediately followed by the annual Registered Program Conference.

“We’ve been at about a 30% acceptance rate [on presentations] for the first two years, which is really solid, starting out,” says Chaffin.  (Lower acceptance rates are better than high ones in Academia; it means you’re able to be selective.) The plan next year is to include a “research wonderment” session where the audience brainstorms different questions or proposes research ideas they would like help with—and Chaffin expects practitioners to attend and throw out their own ideas.  “In addition, we do a doctoral seminar at the beginning, which is really helping doctoral students get feedback on their work.  I think,” he adds, “that the Colloquium has helped as a springboard to our journal.”

Journal?  The second body of knowledge initiative is the launch of a new professional journal, to be published quarterly, called the Financial Planning Review, issue number one scheduled to debut later this year.  The journal’s content, Chaffin says, will be academic and practical at the same time, meaning that articles will be included only if they meet the rigorous standards that a professional journal would have to meet to count toward tenure in the “publish or perish” academic world, but also would have to be actually relevant to a planning practice.  (If you read the Journal of Finance, and see articles that seem to be more related to mathematical games than actual portfolio construction, you get a sense of the distinction being made here.) 

The selection process will be the standard double-blind peer-review methodology, with all reviews conducted by respected academics.  Topic areas will include portfolio choice and design, behavioral finance issues, household finance and consumer issues, psychology and human decision-making, consumer finance and regulation, and human sciences generally.  John Wiley & Sons will be the publisher, and the magazine will be distributed to CFP professionals.

Ideally, all of this will enhance the financial planning’s ‘academic respect’ factor. 

“Our goal,” says Chaffin, “is that by the end of year five, Financial Planning Review will be indexed and have an impact factor of 1 or better—meaning at least one citation per paper.”  This, he explains, is important to get the journal on the list for tenure or promotion at colleges and universities—which, in turn, impacts the standing of financial planning at the college.  That, in turn, affects access to financial planning programs by current and future students.  (If you’re interested in submitting your own research, you can download the latest “call for papers” here: https://centerforfinancialplanning.org/wp-content/uploads/2017/10/Financial-Planning-Review-Call-for-Papers.pdf.)

To gain this kind of respect, you need a respected editorial board, and Chaffin believes this is a strong point of the Review.  Initially, it will function with not one but three editors: John Grable, Ph.D., CFP from the College of Family and Consumer Sciences at the University of Georgia; Chris Geczy, Ph.D. of the Wharton School of the University of Pennsylvania; and Vicki Bogan, Ph.D. of the SC Johnson College of Business at Cornell University.  They will work with a team of Associate Editors, including John Driscoll, Ph.D. at the Federal Reserve; Scott Rick, Ph.D. of the Ross School of Business at the University of Michigan; Werner DeBondt, Ph.D. of Depaul University; Sherman Hanna, Ph.D. at Ohio State University; J. Michael Collins, Ph.D. at the University of Minnesota; Kent Smetters, Ph.D. of the Wharton School at the University of Pennsylvania. Chaffin himself serves as executive editor.

Some of the papers that are presented at the Colloquium will eventually find their way into the Review, and together they will actually serve five goals at the same time:

1) Providing new research into better ways to offer financial planning services that will (theoretically, at least) help planners create better outcomes.

2) Create a new outlet for academics in financial planning so that they will publish and not perish (and hopefully enhance their standing at their various universities).

3) Enhancing the quality of published research in the planning profession, thereby enhancing the status of the planning departments whose members are presenting at the Colloquium and publishing in the Review.

4) Expanding the number of academics who are interested in contributing to the financial planning literature, to include people in, for example, psychology or sociobiology programs, or even, potentially, experts in machine learning and automated advice delivery.

5) Contributing to an evolving body of knowledge that defines the profession’s expertise.

Body of Knowledge

Eventually, the Review articles will be included in an as-yet unnamed body of knowledge website that will be freely accessible for CFP professionals to log into.  As Chaffin envisions it, every contribution to the Review will be posted, alongside a short overview that helps translate the (sometimes difficult) academic language into how the article relates to a financial planner’s recommendations and services.  There will be videos where each author summarizes in his/her own words what the research is about.  The site should be up before the end of the year, but the Cliff Notes, author video and organization of articles into categories will push into the first part of next year.

“The plan is also to include a thought leadership series,” says Chaffin, “where scholars and practitioners can debate the implications of different research, and in an ideal scenario, they might team up for actionable followup research.  If a scholar partners with a practitioner,” he adds, “the practitioner would contribute the real world insights, and the scholar brings expertise in developing a research study around those real-world insights.”

The hope is that this body of knowledge website will be the research hub that everything else revolves around.  “The Review happens quarterly,” says Chaffin.  “The Colloquium happens once a year.  But the body of knowledge website is going to be a living, breathing entity, where practitioners and scholars can talk about research that affects their practices.”

Big Picture

I have to confess that when I saw the initial press releases announcing the creation of the Center, I didn’t quite know what to make of it, except that it seemed to be expanding the CFP Board’s reach into areas far beyond tending a designation.  What was the point of what looked like a lot of overreach?

The point is much more understandable if you view the Center as a resource designed to fill in the gaps, to address the areas where financial planning persistently falls short of becoming a profession.  Promoting gender, racial and ethnic diversity, creating professional career tracks, attracting more candidates into the profession, enhancing the status of the financial planning curriculum in the academic world, building a body of knowledge, attracting new, better and more rigorous research into better ways to do financial planning — taken collectively, as they move the needle toward making you a member of a recognized profession, it has the potential to lift all boats. 

Even so, the Center has attracted controversy, not all of it related to confusion about its mission.  Its reliance on community contributions is probably, in the final analysis, the most controversial aspect of the Center.  Overall the Center has collected $10.2 million for its various projects, from TD Ameritrade, Envestnet, Northwestern Mutual, Fidelity, Vanguard and AssetMark and many other companies, plus contributions from planners too numerous to mention, prominently including Fort Worth, TX planner Dave Diesslin’s contribution for  college tuition scholarships, and Roy Diliberto’s donation to the body of knowledge website.

I know of several college programs that are fantasizing about what progress they could have made if some or all of that money had been sent in their direction instead.  One college administrator told me that the diversity issue could be substantively addressed with as little as $1,000 a year in scholarship money to 200 promising minority students each year.  The WIN toolkit idea pales in comparison, and using the various scholarship programs to fund certificates rather than classroom attendance for minority professionals feels a bit discriminatory. 

Bigger picture, is the Center diverting money from colleges into its own pockets?  And is it usurping an academic leadership role that would normally be taken on, directly, by the professors at one of the major financial planning programs?

Indeed, some people I talked with about the Center see the potential for existing institutions and programs to be crowded out by the academic center.  What role does the Academy of Financial Services (the membership organization for financial planning and related academics) have in a future dominated by the Center functioning as (as the website puts it) “the academic home for faculty in financial planning and related disciplines?”  Can the annual AFS meeting effectively compete for papers with the annual Colloqium? 

What role does the venerable Journal of Financial Planning play if/when the most respected academics are publishing their best research articles in the Financial Planning Review?

One hopes that the donors to the Center aren’t diverting commitments they would otherwise have made to the university financial planning programs.  And one could certainly argue that the Academy and the Journal will continue to have a role to play in the profession—and might perhaps be more focused and effective now that they face rather stiff competition. 

The bigger picture objection to the Center’s ambitious efforts is that the CFP Board (fairly or unfairly) still doesn’t have the full trust of the financial planning community.  Do we want the CFP Board to greatly expand its influence into areas beyond credentialing at a time when the organization clearly doesn’t (by charter and long history) answer to the very profession that the Center ostensibly was created to promote?

The counter-question to that understandable sentiment is: who else is step-ing up?  Who else has defined what steps need to be taken to bring financial planning to a professional status, and set about to systematically make them happen?  More to the point, who else could, from a resource standpoint?

I believe the Center has taken on an important role, and at the same time the it will be hindered at times by controversy and objection to the CFP Board taking on a larger role.  The only way to quiet the controversy is to be effective in moving the financial planning community forward toward becoming a profession.

At the very least, this interesting new multi-faceted organization is very clear about the goal. 

“The Center, at its core, with its diversity, its workforce development and its academic initiatives, is really building the financial planning profession,” says Mohrman-Gillis.  “We envision a sustainable and diverse profession that can serve all Americans going forward.  And we invite firms, individuals, registered programs and everybody in the community to contribute their time, talent and treasure.”