The US association that represents fee-only financial planners will require from January 1, 2013, that anyone applying for membership must hold the Certified Financial Planner (CFP) designation.
The National Association of Personal Financial Planners (NAPFA) says it is important that the financial planning profession “rally around a singular professional designation”.
NAPFA has about 1500 members and its website says the association was established in 1983 by a group of planners who wanted to “provide high-quality, long-term financial planning and access to a full range of investment and insurance products—but without the influence of commissions”.
NAPFA says the public is “bombarded with an alphabet soup of designations” and requiring CFP status for its members will reduce confusion and lead to greater public trust and confidence.
The CFP designation is administered within the US by the CFP Board of Standards. Any financial planner is free to undertake the required study and, if successful, attain CFP certification, regardless of their professional affiliation.
The board’s chief executive, Kevin Keller, said in a statement that “NAPFA’s endorsement of the CFP certification as ¬the standard for financial planning will provide consumers with a clear, strong and unified message”.
The decision by NAPFA came after a two-week consultation and comment period, in which it says its members were “overwhelmingly in favour” of applying the CFP requirement.
The CFP designation is administered outside the US by the Financial Planning Standards Board (FPSB). The FPSB generally licenses only one entity per country or territory to administer a CFP program. In Australia, that body is the Financial Planning Association of Australia (FPA).
Dancing in the dark
The chief executive of the FPA, Mark Rantall, says establishing the CFP mark in the minds of consumers is an important step in professionalising the financial planning industry and in fostering trust and confidence in its practitioners.
“We’ve been dancing around this issue for far too long,” he says.
“At some point in time, the vast majority of financial planners, who want to be regarded as serious financial planners, need to have and should have the CFP designation.
“It may be in 10 years’ time; it may be a generational thing. We are not saying that those very experienced financial planners, who do a great job for their clients, should go out [now] and get certified.
“Consumers deserve the best advice, and the time for spin has gone. You have to have some substance and structure and professionalism behind what you do.”
This is a tremendous step forward. The number of CFP professionals around the globe is growing rapidly and is approaching 150,000 across 24 countries. The aim is to see consumers recognising the CFP designation as the premier accreditation for quality financial planning advice – that is the goal of FPA in Australia and the Financial Planning Standards Board (FPSB) world wide.