A move towards title protection exposes cracks in planner qualifications

By Daniel M. Yerger

With the Financial Planning Association’s announcement in July that it is moving forward with an advocacy agenda to gain title protection for the “Financial Planner,” it has become evident that there is little agreement regarding the standardization of what it means to be a financial planner.

While some have simply suggested the CFP® Marks as the benchmark for being a financial planner, many have pointed out that using something like the marks as the qualification meets the definition of licensing more than of title protection.

In contrast, others have pointed to similar qualifications such as the ChFC, CLU, and PFS designations as equivalent or equal in qualification to the CFP®. Of course, none of this addresses the underlying issue of what it actually means to be a financial planner.

While many planners are quick to debate fee models and the pros and cons of commissions in the financial planning process, there is much less discussion of what the delivery of financial planning is or looks like or what a competent financial planner is.

While one planner may specialize in modular plans delivered by the hour or in a la carte fashion, another might scoff at the lack of a comprehensive plan, all the while ignoring that perhaps the a la cart planner’s work was higher quality than the comprehensive plan they offer. With the discussion of implementing title protection of course comes the additional concern of where the bar will be set.

Too high or too low

Assuming the FPA can successfully battle the various lobbies that gain from the ambiguity and public confusion around the title financial planner to gain some version of a financial planning title protection, could the bar be set too high or too low?

On the one hand, if the title becomes so burdensome to obtain, we may see an exodus out of the professional space as has been seen in Australia after the royal commission all but banned the sale of commission-based products, resulting in an almost 50% reduction in the headcount of financial planners in Australia in just a few years.

On the other hand, those planners concerned with consumer protection may be dismayed to find that the title protection is little more than a gate with no fence, as those who do harm under the financial planner title may simply pivot to other attractive and marketable titles.

Title protection is a badly needed thing in a world where literally anyone can call themselves a Financial Planner, but it is clear that there is a long road ahead for the FPA and for advocates of title protection. Only time will tell whether financial planners will see themselves victorious in protecting the public from unscrupulous actors or whether the regulatory bar will fall short, as seen in Regulation BI and the predecessor failed DOL rule.

One can only hope for an outcome that not only protects the public without overburdening planners but also sees interest in the financial planning profession bloom.

Daniel M. Yerger, MBA, CFP®, ChFC, AIF, CDFA, is the owner of MY Wealth Planners, a fee-only RIA in Longmont, CO, and a student in Kansas State University’s Personal Financial Planning Ph.D. Program.

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