Journal of Financial Planning: October 2019
Dave Yeske, DBA, CFP®, is managing director at Yeske Buie, past chair of FPA, and practitioner editor of the Journal of Financial Planning. He earned a bachelor’s degree in applied economics and a master’s degree in economics at the University of San Francisco, and a doctorate in finance at Golden Gate University, where he holds an appointment as distinguished adjunct professor and is director of the financial planning program.
A stranger to our profession—or even a newcomer—might rightfully ask why we’re celebrating the 50th anniversary now. The 50th anniversary of what? Unlike most professions, ours can actually point to a precise founding date: December 12, 1969, when Loren Dunton convened a group of financial services executives at a Chicago hotel to discuss the possibilities for a new way of delivering financial advice.
Out of that gathering came the seeds of what would become FPA and CFP Board. More significantly, however, out of that gathering came a vision for providing integrated financial advice to individuals and families. Not because no one had been advising people on tax planning strategies before that, or budgeting, or risk management, or portfolio management. But because before that you had to go to three or four different advisers, and their advice was myopic; it was tax-focused, or insurance-focused, or investment-focused. If you wanted to retire, your stock broker would sell you a mutual fund or your insurance agent would sell you a whole life policy; everyone had their particular hammer and every problem looked like a nail.
After the Chicago confab, however, there was the possibility of talking to one adviser who could make recommendations that spanned all those silos, melded their possibilities, and offered integrated solutions.
Thus were we born as a new profession.
The early years saw the tools of finance and economics translated from the corporate realm to that of the household. Financial statement analysis, tax planning, time-value-of-money, portfolio optimization, and risk management techniques—part of the traditional toolkit of corporate analysts and consultants were now reconceptualized to meet the needs of individuals and families.
Not that there wasn’t a dark side to the profession in those early years. For many financial service enterprises and for many practitioners as well, financial planning was nothing more than a delivery system for financial products. And though many would proclaim that, “financial planning is a process, not a product,” this perspective was not the dominant feature of the landscape during those early years.
Twenty years after the founding, one of our profession’s greatest philosophers, Dick Wagner, wrote a critique in the January 1990 issue of the Journal titled, “To Think . . . Like a CFP,” in which he assessed the state of the profession and found it wanting. Dick exhorted us to consider the true imperatives of profession and to stop play acting, to stop complaining that we weren’t being taken seriously, and to understand that we are not self-anointed; professional status can only be bestowed by those we serve. Dick set a high bar for those who aspire to the status of professional:
The moral legitimacy of earning a living within the context of a profession derives from a core conviction that the rules of the profession cannot be altered even if it means that a “living” might not be optimized or even earned at all. To violate this means to put oneself outside of the profession.
Another 30 years have passed since publication of that seminal paper and we are now farther away from Wagner’s call to action than he was from the profession’s founding when he composed it. Much has changed in the intervening decades.
Many Positive Developments
The debates about multiple paths to competency have been settled. The financial planning profession has coalesced around one standard of competence and ethics, the CFP® marks. Whether one considers the CFP® marks the starting point or the ending point for professional development, it is at least the common point. No caring and responsible mentor would do other than advise an aspiring financial planner to pursue certification. And fewer and fewer members of the public would hire an adviser who wasn’t certified. Something may change in the future, whether because of new government regulations or some source we cannot anticipate, but for now, in the current landscape, the question has been settled.
And speaking of appropriate standards of competence and ethics, CFP Board, in its new Code of Ethics and Standards of Conduct, requires CFP® professionals to hew to a fiduciary standard of care when giving any kind of financial advice. While client-centered, fiduciary-based advice has long been the standard adopted by serious financial planners, it is a welcome sign of progress that it is now mandatory for all CFP® professionals.
On another front, we have a growing academic community supporting education and research in financial planning. The opportunities for earning a bachelor’s degree in financial planning continue to expand but so do opportunities to earn a master’s or doctoral degree in the field. We can now contemplate the possibility of a career path that begins with a formal degree in financial planning, proceeds to professional certification, and culminates in advanced academic study leading to a specialization. The academic landscape continues to evolve but the critical pieces are in place, however nascent their form.
Another development now more than a quarter century in the making is the rise of the financial life planning (FLP) movement. FLP emerged in the mid-1990s from a recognition that the most important input to the financial planning process was to be found in the hearts and minds of our clients, rather than their financial statements or our own expectations and presuppositions. Which is to say, our clients’ personal experiences, their values, and their vision for the future should be the driver for all planning and all advice.
Even though we still use the differentiating phrase, there’s a growing consensus that financial life planning is just financial planning done well. And the skills encompassed by FLP aren’t just those of deep discovery, they also encompass the skills of the change agent and counselor.
Financial planning has always been interdisciplinary and is now expanding to include coaching, facilitation, and financial therapy. Humanistic skills are required if you seek to counsel human beings. Gratifyingly, our academic programs are evolving and expanding to teach these skills in a formal, research-based environment that offers insights from the fields of behavioral finance, communication theory, and counseling psychology.
The expansion of our skills in the human dimension is one of the reasons why financial planners are unlikely to be replaced by robo-advisers. Most human beings prefer to work with other human beings, it’s why we have study groups, personal trainers, and life coaches. This is the result of millions of years of evolution and is unlikely to be robo-ed away any time soon, especially when we’re helping clients come to terms with what Dick Wagner called “the most powerful secular force on the planet”—money.
Another positive development is the growth of pro-bono financial planning. The Foundation for Financial Planning, the profession’s only non-profit solely devoted to facilitating the delivery of pro-bono financial planning advice to those in need, is stronger than ever as it celebrates its 25th anniversary. And the number of programs is growing, from those serving members of the military and first responders, to families suffering from the financial toxicity of a serious cancer diagnosis. Every classic definition of profession includes an altruistic motive and an acknowledgment of pubic responsibility. The growing number of CFP® practitioners committing their dollars and their time to serving those in need is truly a bright spot and sign of ongoing progress.
Where We Come Up Short
While we can point to many bright spots, there are still some rough places where we come up short as a profession.
For one, we’re still graduating very few students from financial planning degree programs relative to the demands of the marketplace and many of those we do graduate are being recruited by financial services firms not doing financial planning. And the vast majority of new CFP® professionals continue to come through certificate programs, many of which are little more than expanded exam prep. You don’t build culture and professional identity on such a narrow foundation.
Further on the topic of education, CFP Board continues to put what I consider significant time, energy, and money into getting financial planning programs into “elite” business schools with seemingly little to show for the effort. The vast majority of existing degree programs in financial planning still live in the schools of Family and Consumer Science at our great land grant universities. Perhaps CFP Board should put more resources into registering and supporting programs that arise naturally rather than sowing seeds on barren soil.
We’re also still arguing about how we should get paid as financial planners, a debate that has been ongoing since at least 1983 and the founding of NAPFA. Ultimately, it is surely clients who will decide how they want to pay for advice, not financial planners.
Greater diversity among practitioners is another area that, notwithstanding increasing attention, falls far short of the ideal. Diverse clients are best served by a diverse body of practitioners. And diverse practitioners can also be role models to attract ever more diversity to the field, which leaves the profession with something of a bootstrapping challenge and a puzzle that has yet to be solved.
Finally, the growth of our membership associations has been anemic relative to the overall growth of the profession. Perhaps this is a result of some practitioners obtaining the CFP® designation simply for marketing purposes, rather than because they are dedicated to providing client-centered, fiduciary-based advice. For culture and professional identity to emerge and evolve requires a focal point, a professional community, which is the traditional role of membership associations. To acculturate the growing number of CFP® professionals into the ideals of true profession, we need them in the community and part of the conversation. The challenge for the profession —and ultimately its membership associations—will be to attract CFP® practitioners who see themselves as a certain kind of professional—one who believes that client-centered, fiduciary-based advice is the standard.
Notwithstanding the challenges, however, there is still much to celebrate as we arrive at our 50th anniversary.
We have coalesced around a single, fiduciary-based standard of competence and ethics in the CFP® marks. We have come to recognize the importance of mastering the skills of the interior dimension. Formal academic programs are growing and expanding to include more advanced studies, including a growing focus on humanistic skills. The profession can increasingly offer a clear and compelling career path to new aspirants. And while there is still much to do, we have at least begun to embrace the imperatives of a true profession and are working to make them real.
Learn More
Celebrate in Minneapolis:
Join us at the FPA Annual Conference, Oct. 16–18, 2019, in Minneapolis, where we will celebrate the 50th anniversary of the financial planning profession. The anniversary will be recognized and celebrated at each general session, as well as at the Annual Conference party on Oct. 17. Visit FPAAnnual.org to learn more.