January is a busy month for CFP Board. The Council on Examinations meets this week, the Board of Directors meets January 17 -19, and results from the November 2006 CFP® Certification Examination will be released at the end of the month.

At the Board of Directors meeting, we'll be addressing several of the big issues left unresolved in 2006. The task force assigned to review the comments to last year's proposed revisions to CFP Board's ethical standards will present their findings and recommendations. We'll also hear reports from the committees assigned to set up a thoughtful and thorough process to find CFP Board's next CEO, including details of the progress that has been made with the assistance of the executive search firm Spencer Stuart to develop a detailed criteria for the job and evaluation benchmarks for the CEO position. I'm confident we're in good hands with the teams working on both of these issues, and we look forward to releasing information about the Board's decisions as soon after the meeting as possible.

Since the announcement of Sarah Teslik's departure, we've heard from many people interested in leading CFP Board's operations. If you or someone you know is interested in being considered for the CEO position, please feel free to send your statement of interest to Leslie Hortum of Spencer Stuart at LHortum@SpencerStuart.com.

Karen P. Schaeffer, CFP®
2007 Chair, Board of Directors
CFP Board

The best investment advice I've ever heard can be summed up by the title of the creepy 1973 thriller starring Julie Christie and Donald Sutherland: Don't Look Now. The advice itself is pretty basic: Watching the markets too closely can be hazardous to your health. The more closely you monitor your portfolio, the more aware you become of its volatility. And all those peaks and troughs can make your heart beat in a similarly erratic fashion. Taking a look at the readings once a month, or even twice a year, makes for a much smoother ride, while providing a much better view of the big picture.

My wife and I built a small portfolio a few years back, hoping it would one day help fund our kids' college educations and/or our retirements. Then we tried to forget about it. Initially, it was easy not to look. We happened to invest just before the tech bubble burst, so we had no trouble averting our eyes-unless we were looking for a reason to get seriously depressed. Nowadays, our twice-yearly statements bring much better news but we still don't take all that much interest. As long as that money continues to grow at a reasonable clip, we're happy to leave it alone.

Recently, though, I've started paying attention to the markets on a daily basis. I do this out of necessity rather than choice. Having left my former employer, I must exercise my stock options within a year, and the deadline is drawing near. So over the past 12 months, I've watched the firm's stock price carefully. As a result, I've felt a little like a subject in a prospect theory experiment-and learned a lot about how difficult it is to outsmart the market.

Prospect theory was developed by Daniel Kahneman and Amos Tversky in 1979 as a way to incorporate some of the emotional and psychological quirks of human behavior into economic theory. One of the quirks Kahneman and Tversky observed is loss aversion, our tendency to strongly prefer to avoid a loss rather than to acquire a gain. (Some studies suggest that the fear of a loss has twice the psychological impact as the lure of a gain.) For most of the time I've held my options, loss aversion has been the least of my worries; the options have been underwater for so long that I had to wear a snorkel just to check the price. Happily, though, the stock has been more buoyant of late. The downside is, my loss aversion instinct has kicked in.

I am mildly encouraged every time the stock price ratchets up a notch or two. But I am devastated when it drops back down again, even if it's only a gentle fall. No gain ever seems enough, while every loss seems far too much. In his book Fooled by Randomness, Nassim Nicholas Taleb, dean's professor in the sciences of uncertainty at the University of Massachusetts at Amherst and a former derivatives trader, describes the risks of watching your investments as closely as this. Over a short period of time, "One sees the variance, little else," Taleb writes. "Our emotions are not designed to understand the point . This explains why people who look too closely at randomness burn out, their emotions drained by a series of pangs they experience."

My pangs are increased by my uncertainty about where the stock is going next. In Fooled by Randomness, Taleb argues that most traders succeed through luck rather than skill. That's because the market is fiendishly complex, moved by extreme and unexpected events Taleb calls "black swans." Our predictive abilities, on the other hand, evolved to handle much simpler variables, like where to find food or how to avoid predators. So our record of predicting black swans is pretty abysmal. Taleb cites IBM chairman Thomas Watson's 1943 estimate that "There is a world market for maybe five computers" as an example. "The economic world is driven primarily by random jumps," Taleb wrote in a 2005 Fortune article called 'How the Finance Gurus Get Risk All Wrong'. "Yet the common tools of finance were designed for random walks in which the market always moves in baby steps."

Unfortunately, as a trader, I'm still learning to crawl. I exercised some of my options a while ago after the price hit a level it hadn't reached for several years. I was pretty pleased with myself for a while-until the firm sold some of its businesses and the stock price shot up several dollars in just a few weeks. That's when, ironically, loss aversion came to my rescue. Somehow, my foregone gains weren't anywhere near as painful as the prospect of losing my options altogether if they had stayed underwater. Still, I'll be glad when I no longer have to watch the market so closely. And maybe I'll pop Don't Look Now into the DVD player the next time I'm tempted to peek at my portfolio.

- James Geary

When Karen Greenberg's son Ricky was diagnosed with autism back in 1990, she had two reactions. As a mother, she was determined to provide Ricky with the best possible care. As a CERTIFIED FINANCIAL PLANNER™ professional, she was determined to provide him with a lifetime of financial support as well, even after she herself had passed away. "In all my years of training and practice, I had never encountered this situation before," Greenberg recalls. "I realized I had no idea how to secure the future for my son, who would need financial help for the rest of his life."

Greenberg first turned for advice to an attorney. He suggested she disinherit Ricky and leave everything to her daughter, who would then have to assume responsibility for her brother's care. That didn't feel right to Greenberg; she didn't want her son's care to be her daughter's burden. So she immersed herself in the local law library to find a solution. She emerged with a comprehensive plan to establish a special needs trust, funded by a life insurance policy and investments, that would provide for Ricky while preserving his eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).

Then Greenberg did something else that combined her experience as a mother and a CERTIFIED FINANCIAL PLANNER™ professional: She set up Prosperity Life Planning, a non-profit organization that helps families of disabled children and adults secure their loved ones' financial futures. Now, with a grant from the CFP Board, Greenberg is expanding Prosperity Life Planning's activities in South Florida.

The disabilities that fall into the category of special needs are diverse, ranging from autism and Down Syndrome to mental illnesses and developmental delays. Yet special needs planning is still unfamiliar territory to many financial planners - and to many parents as well. In a survey carried out by MetDESK®, the Division of Estate Planning for Special Kids at financial services provider MetLife, 73% of respondents said they had not yet begun setting aside money for their special needs children.

Constance Stone, president of Stepping Stone Financial Inc. in Chagrin Falls, Ohio, discovered special needs planning only after her brother was hit by a truck and left disabled. In an article in the October 2006 issue of the Journal of Financial Planning, she cites some sobering statistics. According to the 2003 U.S. Census, over 77 million Americans (more than 27% of the population) were considered disabled in some form. And according to a report by the Special Needs Alliance, a national network of lawyers specialized in disability and public benefits law, almost 27% of the adult population has provided care for a chronically ill, disabled or aged family member or friend in the past year. Still, Stone writes in her article In the Blink of an Eye: Special Needs Planning, "A search of the archives of professional financial planning journals and continuing education courses will net surprisingly little on the topic of special needs planning . We can guide our clients through the traditional financial planning process to incorporate and address special needs."

Together with her husband Jaret Vogel, a financial services professional, Greenberg provides just this kind of guidance. At Prosperity Life Planning (PLP) workshops across South Florida, the couple takes families with special needs children through the entire financial planning process-writing a letter of intent that describes the disabled child's personality, preferences, and the parents' goals for their child; establishing a special needs trust; choosing successor trustees and guardians for the child; and advising on the tax implications and administration of the trust. Greenberg and Vogel also introduce families to local attorneys specialized in working with special needs clients.

Karen Greenberg, CFP®
Photograph by Taylor Jones/ Palm Beach Post

Following the workshop, Greenberg and Vogel meet with interested families to review their personal situations and create individualized plans of action. "I often ask parents, 'If you were to have died yesterday, what would you want for your family today?'" Vogel says. "Most families are hard-pressed. Caring for a disabled child costs more time and more money, so there is tremendous pressure on the family. It's hard to think 30 or 40 years ahead when you're struggling to cope and pay the bills right now. We're there to reassure people that this is not a black hole. We can help guide them through the process." Prosperity Life Planning is already putting the CFP Board grant to work, using grant funds to help educate and then connect families with legal professionals who can help them take care of the special needs trusts and other legal issues that can be vital for special needs planning.

One person who has benefited is a woman we'll call "Debbie," a partially disabled single mom with a 12-year-old autistic son. Debbie attended a PLP workshop in October 2005, and last summer received a small medical malpractice settlement in connection with her son's burst appendix. When her attorney suggested the settlement be placed in an educational IRA for her son, Debbie remembered the workshop and knew that such an arrangement could jeopardize her son's eligibility for government benefits. So Debbie called Karen Greenberg, who has created connections with a group of elder law attorneys, specialized in disability law, who have agreed to offer steeply discounted rates to a limited number of qualified families working with PLP. Greenberg set Debbie up with an elder law attorney, and the attorney provided Debbie's son with a trust to receive his settlement money and a trust to be named as beneficiary of Debbie's life insurance policy. The attorney provided a will for Debbie as well as power of attorney and health care directives for her son's affairs. The cost for the legal services? Eight hundred dollars for what amounted to $5,000 in legal services. For Debbie, the peace of mind is priceless.

Greenberg and Vogel are now working to reach signed agreements with 25 attorneys, each willing to offer different reduced rate packages for services often needed by special needs families. Vogel states, "Our goal for 2007 is to secure 100 signed agreements, and then raise $100,000 through the non-profit to help 100 new families." PLP has also initiated an effort to encourage legislation for a "Prosperity Tax Credit" that would provide families with a special needs member a tax credit that could be used to create a guardianship or third party special needs trust. More about the tax credit initiative is available on PLP's Web site.

"Most parents are not thinking about the long-term financial futures of their disabled children," Greenberg says. "And the ones that do think about it are often so afraid of making a mistake that they end up doing nothing." Greenberg's expertise and advocacy have taken the fear out of special needs planning, helping families with disabled children take action to secure their loved ones' financial futures. "Parents also report they're sleeping better at night."

Read more about projects receiving funding through CFP Board's 2006 Financial Planning Grants program.

Bachelor's Degree Requirement Extended to March 1, 2007

CFP Board has extended to February 28, 2007 the deadline for candidates without a bachelor's degree to complete the requirements for CFP® certification. The bachelor's degree requirement, which requires applicants for CFP® certification to obtain a bachelor's degree in any discipline from a regionally-accredited U.S. college or university, was originally announced with a January 1, 2007 effective date.

Candidates who do not have a bachelor's degree and have passed the CFP® Certification Examination within the last five years (including those who pass the November 2006 exam) must fulfill all remaining certification requirements (including work experience, ethics and any required continuing education) by February 28, 2007 in order to be exempt from the bachelor's degree requirement.

Individuals who have not passed the November 2006 or earlier CFP® Certification Examinations will be required to meet the bachelor's degree requirement and are not affected by this temporary exemption. The bachelor's degree requirement does not apply retroactively to those who currently hold CFP® certification. CFP Board's Web site contains more details about the bachelor's degree requirement.

March 2007 Exam Application Deadline Extended to February 7, 2007

Every five years CFP Board updates the job analysis that determines the content of the CFP® Certification Examination topic list. When an updated topic list is tested for the first time, as it was on the November 2006 exam, a standard-setting committee, also known as a pass score committee, is convened and charged with establishing the baseline competency level to which all future exam forms will be equated. More detailed information about the scoring of the CFP® Certification Examination is presented in a Journal of Financial Planning article titled "Taking (Some of) The Mystery Out of The CFP® Certification Examination," by David Ashby, DBA, CPA, CFP®, available at: http://www.fpanet.org/journal/articles/2001_Issues/jfp1101-art13.cfm

Because the standard-setting process is an additional function of the scoring process, additional time is required to complete the scoring process for the November 2006 exam. We anticipate that the November 2006 exam results will be available approximately ten weeks after the exam date, or Friday, January 26, 2007. All exam-takers will be notified as quickly as possible if it appears exam results will be delayed further.

As November 2006 exam results will be delayed, CFP Board has extended the application deadline for the March 16-17, 2007 exam by one week, allowing candidates who fail the November 2006 exam until February 7, 2007 to complete the application process for the March 2007 exam. The exam application process is initiated by completing an online application form.

OPPORTUNITIES

CFP® Certificants Sought to Participate in 2007 Financial Planning Clinic in Boston CFP Board seeks CFP® certificants to participate in a Financial Planning Clinic on Saturday, August 4, 2007 at the Sheraton Boston Hotel. The format is simple - volunteer CFP® professionals meeting one-on-one with individuals and families to answer their financial questions - and the event is an exciting way to reach the public with first-hand experience of the benefits of financial planning. The Boston Financial Planning Clinic builds on the success of the 2006 Financial Planning Clinic in Los Angeles, where more than a hundred CFP® certificants made a positive difference in the lives of thousands of people by sharing their time and expertise to help individuals, couples and families sort out their personal finance questions and concerns. The event introduced many to the benefits of financial planning, and more than 94% of the attendees indicated that they found the clinic so rewarding that they would recommend it to others. The CFP® certificants who volunteered also found the event satisfying, with 100% of the volunteers stating that they would participate again. Many volunteers expressed how much fun they had interacting at such a personal level with so many consumers. On August 4, 2007, CFP Board will bring the Financial Planning Clinic experience to Boston, and we expect the event to draw thousands of consumers interested in benefiting from financial planning. The Financial Planning Clinic will be held at the Sheraton Boston Hotel from 10:00 a.m. to 2:00 p.m. on Saturday, August 4, 2007, and volunteers will be required to participate for the entire time. A 30-minute lunch break and complimentary lunch and refreshments will be available. Only CFP® certificants in good standing with CFP Board may participate. If you are interested in participating at the Financial Planning Clinic, apply online or contact CFP Board by e-mail at clinic@CFPBoard.org or by phone at 800-487-1497 with the following information: Name Phone Number E-mail Address Mailing Address If you are multi-lingual, the languages you would like to use at the Financial Planning Clinic. The general financial planning topics you are most interested in discussing with attendees. For additional information about the 2007 Financial Planning Clinic in Boston, visit www.CFP.net/clinic. < back to top

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