Journal of Financial Planning: July 2015
The year was 1985. The Dow Jones Industrial average achieved a first-ever close above 1,500. The bull market in bonds was also underway with the yield on the 10-year Treasury note around 11 percent and descending by year’s end. And the new vehicle for Americans to save for retirement—the 401(k)—was celebrating its fifth anniversary.
That same year Certified Financial Planner Board of Standards Inc. was founded.
Thirty years later we find ourselves at a very different place in history. The Dow has risen more than 10-fold, breaching the 18,000 mark. Interest rates, still at an all-time low, may be poised for a climb. And more than $4.4 trillion is invested in 401(k) plans.
What hasn’t changed is CFP Board’s unwavering pursuit of its mission to benefit the public by upholding the Certified Financial PlannerTM certification as the recognized standard of excellence for competent and ethical personal financial planning. Today, the CFP® certification is the must-have designation for those providing personal financial advice, with more than 72,000 CFP® professionals committed to providing integrated financial planning services with fiduciary-level accountability.
The growth of the certification reflects the growth of a profession: one that is recognized, respected, and relevant to meet the ever-increasing demands of Americans for expert and ethical financial advice as they confront the challenges of building, protecting, and transferring wealth.
The movement to create a new profession of financial planning was established by a group of forward-thinking visionaries in 1969, with the College for Financial Planning graduating the first class of CFP® professionals in 1973. Ownership of the CFP® marks and responsibility for continuing the CFP® certification program was transferred in 1985 to an independent, nonprofit certifying and standards-setting organization with a mandate to establish ethical standards for the profession. That organization was the International Board of Standards and Practices for Certified Financial Planners Inc. (IBCFP), renamed in 1994 as Certified Financial Planner Board of Standards Inc.
Throughout the development of CFP Board and the CFP® certification program, the profession benefitted greatly from professional membership organizations. The Institute of Certified Financial Planners and International Association for Financial Planning, which also trace their beginnings to those early visionaries, merged in 2000 to become the Financial Planning Association. Committed to advancing CFP® certification and supporting CFP® professionals, FPA now thrives with a network of more than 90 chapters and a membership of CFP® professionals fully committed to the values embodied by the certification.
While other professions have taken hundreds of years to gain recognition, financial planning— defined by CFP® certification standards—has achieved broad industry and public recognition in less than 50 years.
Through setting and enforcing our “four E’s”—Ethics, Education, Examination, and Experience—we have created a recognized certification that stands out in the “alphabet soup” of more than 160 financial services certifications and designations. In fact, independent brand tracking surveys of consumers affirm that it is far and away the best recognized financial planning designation.
These results have been achieved by setting a high bar for certification and continuing to elevate the CFP® certification. With the adoption of our first Code of Ethics and Standards of Professional Conduct in 1986, we created professional standards for mark holders, and with our Disciplinary Rules and Procedures we established rules of the road and a process for enforcing those rules with consequences transparent to the public for those who fail to meet our standards. Those rules have been updated periodically, with the most significant change in 2008 when CFP® professionals were required to provide financial planning services as a fiduciary, regardless of their business or compensation model.
The education piece of the certification is critical to advancing the profession, as client needs and markets continue to evolve. In 1987, just 25 institutions offered financial planning education programs. Now more than 230 institutions offer 380 programs, ranging from certificate programs to Ph.D. programs in financial planning. And in 2007, we instituted a requirement that new CFP® professionals hold a baccalaureate degree or higher.
Our exam is considered one of the most rigorous amongst professional examinations. Introduced in 1991, the comprehensive CFP® exam truly separates the CFP® certification from others because it is founded on research that identifies required competencies for the practice of financial planning and requires prospective CFP® professionals to integrate and apply the knowledge gained from their educational programs.
The certification’s high standards and adherence to best practices have been recognized by an independent third-party certification accreditor, the National Commission for Certifying Agencies. This year marked 20 years in a row that CFP Board’s certification program has maintained continuous compliance with NCCA’s standards.
Since relocating its headquarters to Washington, D.C. in 2007, CFP Board has set a bold strategic direction to advance the profession of financial planning in support of our mission:
We increased the number of CFP® professionals by more than 32 percent from 59,000 to more than 72,000 in the United States.
We gained recognition among policymakers as an advocate for financial services that benefit the public and continue to work with our Financial Planning Coalition partners to lay the foundation for recognition and regulation of financial planners.
We raised the stature of financial planning programs within our nation’s universities and colleges, with more than 100 offering financial planning as a baccalaureate degree and 60 more in development.
We launched a national public awareness campaign in April 2011 that has generated strong increases in consumer awareness about the CFP® marks, financial planning, and the value of working with a CFP® professional.
We have begun to address the lack of diversity within the financial planning profession with our WIN Initiative by conducting groundbreaking research to identify why the number of women CFP® professionals has remained static at 23 percent and identifying research-based initiatives to achieve gender parity.
We launched the CFP Board Career Center to provide a one-stop shop for those seeking to start or advance their career in financial planning.
Now, as we celebrate our 30th anniversary, we are seeking, through a new CFP Board Center for Financial Planning, to engage industry partners in supporting efforts to build capacity for the financial planning profession by creating a sustainable supply of new and more diverse advisers to replace our retiring workforce, and by building an academic home to expand our body of knowledge and research that will enable financial planning faculty to penetrate top business schools in this country.
As we continue to work to grow the number of CFP® professionals to help more Americans plan their financial futures, we acknowledge with gratitude our collaboration with the Financial Planning Association, the professional association for CFP® professionals. We are aligned in our shared goal of advancing a profession with the CFP® certification as its cornerstone, and we look forward to decades more collaboration and success in advancing the financial planning profession.
CFP Board is grateful for the vision of our founders and for the dedicated and passionate service of CFP® professionals who have built the reputation of this profession over the last 30 years. At the same time, we welcome and embrace the challenge of changing the face of the profession to meet the growing needs of a younger and more diverse American public for competent and ethical personal financial planning.
RESPONSE FROM FPA:
On behalf of the Financial Planning Association Board of Directors and all CFP® practitioner members of our association, I want to commend the Certified Financial Planner Board of Standards for achieving this remarkable milestone. Like CFP Board, FPA believes the CFP® marks represent what financial planning is and can be moving forward—the gold standard in financial planning.
Our focus on the CFP® marks was originally forged in 1987 by industry pioneer P. Kemp Fain Jr. who, in his seminal white paper, “One Profession, One Designation,” said: “It is a worthwhile goal for all financial planning organizations to join in unifying the professional segments of the financial services industry into one profession, with one recognized designation or credential, promulgated in the public interest.”
While FPA absolutely welcomes anyone who supports the financial planning process, FPA—as the professional association for all CFP® professionals—believes in the long-term vision of building a profession around a set of requirements and standards that are in the profession’s and public’s interest. We look forward to working with CFP Board over the next 30 years to continue to build a profession based on all the CFP® marks represent.
— Edward W. Gjertsen II, CFP®
2015 FPA President