I’d like to thank my predecessor, Karen Schaeffer, CFP®, for her dedicated service to CFP Board. Her work as 2007 Chair of CFP Board’s Board of Directors came at a pivotal time for the organization. Many decisions made during her tenure will have a lasting and positive effect on the organization. I am confident CFP Board is well positioned to promote CFP® certification as the recognized standard of excellence in financial planning.

CFP Board’s Board of Directors will start off 2008 with review and prioritization of CFP Board’s plans for the coming year and beyond. During 2007, much of the Board’s focus was necessarily on the transition of CFP Board’s offices from Denver to Washington, D.C. With the organization successfully re-situated, we’re able to resume our ongoing review of the “4 E’s” of CFP® certification. In 2005, CFP Board reviewed the ethics requirements, a process that resulted in the adoption of the updated Standards of Professional Conduct that take effect in July this year. In 2006, the Board reviewed the education requirements. That process resulted in a set of recommendations currently under consideration. In 2008, one of the Board’s important tasks will be to review the experience requirements for CFP® certification.

The daily work of CFP® professionals serves an important purpose in communities across the country as we work to bring order to our clients’ lives. We help people establish financial security. That security has great potential to transform other individuals and to benefit society at large. We help people shape a reality with their resources that allows their individual values to shine forth. Those efforts are embodied in the standards for CFP® certification, and CFP Board will continue its work to ensure that the standards for CFP® certification remain strong and relevant and undertake renewed efforts to increase awareness of the value of financial planning and CFP® certification for the public.

David G. Strege, CFP®
2008 Chair, Board of Directors
CFP Board

CFP Board’s Denver office officially closed at the end of the business day on December 18, 2007, several days before we’d originally anticipated. While CFP Board’s operations are now centralized in the new Washington office, there are still many aspects of the transition yet to be completed. As we work on wrapping up those loose ends, we appreciate your continued patience and understanding if they happen to cause you any difficulties.

There are many new faces among CFP Board’s staff in Washington. I assure you that all are well aware of CFP Board’s legacy and the dedicated work of many who have contributed over the years to realizing CFP Board’s mission. On behalf of CFP Board’s staff, I’d like to thank all of CFP Board’s stakeholders for their support of the high standards represented by CFP® certification. We look forward to working with you in 2008.

Kevin R. Keller, CAE
CEO, CFP Board

In the U.S. alone, there is currently more than $2 trillion under professional management in the socially responsible investment (SRI) sector, according to the Social Investment Forum. But what is an SRI anyway? And how do you recognize one when you see it? Is it ever acceptable, for example, to suggest an oil company to a client looking to build an SRI portfolio?

That, says Amy Domini, founder and CEO of Domini Social Investments, all depends on the client. “Some people say, ‘I’m about what’s right and won’t invest in petroleum-based anything,’” Domini explains. “Others say, ‘Hey, I’m fine with oil. I use it every day. As long as you drive a car, don’t tell me not to invest in an oil company.’ There is a spectrum of opinion. The average investor is concerned about human rights and climate change, and wants the investments to reflect that.”

So Domini Social Investments tries to find a middle way when answering the question: Is there an oil company out there I can buy? Domini excludes large American oil companies, since their activities can have largely negative environmental and human rights impacts. But she does hold StatoilHydro, the Norwegian oil and gas corporation, which has strong environmental and social governance strategies.

The fact that such nuanced assessments can be made at all demonstrates how rapidly the SRI sector has matured since 1991, when Domini set up the $1.05-billion Domini Social Equity Fund, the oldest socially and environmentally screened index fund in the U.S. Over that period, SRI has evolved from using negative screening — excluding firms involved in alcohol, gambling, tobacco or weapons, for example — to using positive screening, which seeks to identify the companies that best incorporate environmental, social, and corporate governance (ESG) issues into their business practices. And, contrary to popular belief, research shows that investments in firms with strong ESGs perform competitively against investments that do not take ESGs into account.

In Demystifying Responsible Investment Performance, published in October, the United Nations Environment Programme Finance Initiative and Mercer’s Investment Consulting reviewed 20 academic studies of SRIs. Of the 20 studies reviewed, 10 reported a positive relationship between ESG issues and portfolio performance, seven reported neither a positive nor a negative relationship, and three reported a negative relationship. “On balance,” the authors concluded, “the evidence suggests that there at least does not appear to be a performance penalty from taking wider factors into account in the investment management process.” (The report can be downloaded from the UNEP Finance Initiative Web site; scroll down the right-hand column until you find it.)

Part of the reason SRIs generally perform as well as conventional investments is that ESG issues are increasingly seen as having a bigger impact on the bottom line. “People are fed up with Enron-like scandals and poor corporate governance,” says Robert F. Pajak, a Newton, MA-based member of First Affirmative Financial Network, a nationwide group serving socially conscious investors. “It’s not about the lowest wages and the longest hours anymore; it’s about the most sustainable and socially responsible practices. As the results of climate change become clearer, more and more people are going green. For the advisor, that means working with clients to construct investment strategies that match their values. People feel empowered when they understand their values and can actualize them through their investment decisions.”

As the popularity of SRI grows, so do the methods to manage and monitor them. The Web site of California-based SRI advisors Invested Interests offers a Mutual Fund Social Screen Tool that allows users to track certain mutual funds against issues such as the environment, human rights, and labor relations. The U.N. has even come up with its own Principles for Responsible Investment, developed to reflect the relevance of ESG issues. Institutional investors who sign up to the principles commit themselves to, among other things, incorporating ESG issues into investment analysis and decision-making processes as well as ownership policies and practices.

Muhammad Yunus, founder of Grameen Bank, pioneer of micro credit, and recipient of the 2006 Nobel Peace Prize, wants to take SRI to the next level by creating what he calls a social stock market. “Many of the problems in the world remain unresolved because we interpret capitalism too narrowly,” he writes in Social Business Entrepreneurs Are the Solution. “Social business entrepreneurs (SBEs) must develop their own norms, standards, measurements, evaluation criteria, and terminology. This can be achieved only if we create a separate stock market for social business enterprises and investors. We can call it the Social Stock Market. Investors will come here to invest their money for the cause they believe in, and in the company they think is doing the best in achieving a particular mission. It is time to move away from the narrow interpretation of capitalism and broaden the concept of market by giving full recognition to SBEs. Once this is done, SBEs can … make the market work for social goals as efficiently as it does for personal goals.”

Sound far-fetched? Through Grameen Bank, Yunus has already shown how to do well by doing good. And Domini is bullish on the prospects for SRI. She recalls her days as a young, pregnant stockbroker in the early 1980s, when she worked in an office with eight other brokers, seven of whom smoked cigars all day. Today, of course, the idea of smoking in the office — much less smoking cigars around a pregnant woman — is inconceivable. “Revolutionary change can occur in a relatively short period when all the right pieces are in place,” Domini says. “The typical SRI client is an engaged and active idealist. The more people are confronted with issues like climate change and Burma and Darfur, the more engaged, active idealists — and SRI clients — there will be.”

- James Geary

Online Resources

Social Funds
SocialFunds.com features a wealth of information on SRI mutual funds, community investments, corporate research, shareholder actions, and daily social investment news.

Social Investment Forum
The Social Investment Forum is a national membership association dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing.

Reality TV is called a lot of different things, but ‘educational’ is not usually one of them. One look at Get Real: Financial Decisions in the Real World, an audio-visual program produced by the Economic Awareness Council (EAC) in Hinsdale, Illinois, will change that.

Get Real is designed to motivate and inspire 13- to 18-year-olds to develop the financial management skills they will need for life after high school. The program consists of video clips of real young people talking about real-life situations, followed by how-to lessons based on actual personal finance scenarios. “That’s what gets students interested and focused,” says EAC executive director Tracy Frizzell: “Hands-on examples of how to pay bills, balance check books, budget and track expenses.” Get Real has been successfully used throughout the Chicago area at public high schools, libraries and non-profit organizations, and the EAC has been awarded a grant from CFP Board to expand the program’s reach.

One of the stars of Get Real is a young woman who tells the story of how she did well in high school, went to college, then got into credit card debt after her car was vandalized and she couldn’t afford the repairs. “She didn’t have any emergency savings so turned to credit cards instead,” Frizzell explains. “She eventually managed to work herself out of debt, and now she’s an advocate for doing monthly budgets and paying for purchases with checks or debit cards. She still has a credit card, but she doesn’t overuse it.”

Frizzell says these kind of practical tips, delivered by young people themselves, have the biggest impact on students. Each video clip is followed by lessons that cover everything from setting short- and long-term financial goals to developing a savings plan to creating a positive credit record. Sessions are conducted using simple language, to accommodate a wide range of reading levels, and the interviews feature kids from diverse ethnic and socio-economic backgrounds.

“We emphasize the importance of earning at a young age,” Frizzell says, “and how to increase earning potential through education. We explain how even saving as little as a few dollars a day can add up to hundreds of thousands of dollars in retirement. Lots of kids have never heard that before, and it really changes their perspective. They realize that saving and investing isn’t just for the wealthy; it’s for everyone.”

Demand for Get Real workshops is so high the EAC can’t keep up. The grant from CFP Board will be used to conduct train-the-trainer sessions to expand the EAC’s instructional capacity. Teachers experienced in working with youth deliver the most effective financial education, Frizzell says, so the EAC will train youth service professionals in the basics of financial planning. Support will come through email Q&A sessions with volunteers from the financial services community. Students will be recruited through partnerships with the non-profit organizations that already serve them.

“The aim of the Get Real program is to prepare kids to handle money when it becomes available to them,” says Frizzell. “Many of them are just starting to earn, through summer jobs, for example. We try to help them avoid just burning through it. We point out how financial management can make a positive difference in their lives.” And unlike so many reality TV shows, Get Real has a happy ending. Whatever happened to the young woman who dug herself out of credit card debt? She finished college and recently got her first job — as a teacher.

For more information about EAC’s programs and opportunities for CFP® professionals to contribute, visit www.econcouncil.org or send a request to volunteer@econcouncil.org.

Read more about projects receiving funding through CFP Board’s 2007 Financial Planning Grants program.

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CFP Board’s revised Standards of Professional Conduct, which becomes effective July 1, 2008, naturally focuses on the obligations that individual CFP® professionals have toward their clients. The updated Standards also describe certain obligations certificants hold to their employers and principals (see “Focus on Ethics: Obligations to Employers and Principals” in the December 2007 edition of CFP Board Report) and obligations certificants have to CFP Board. The final section of the Rules of Conduct sets forth five Rules that describe a certificant’s obligations to CFP Board.

The first two of these Rules identify important aspects related to the basic terms under which CFP Board awards CFP® certification. Rule 6.1 requires certificants to abide by the terms of their agreements with CFP Board. This includes the agreement to use the CFP® certification marks properly, following the guidelines established in CFP Board’s Guide to Use of the CFP® Certification Marks, and the agreement to cooperate during any trademark-related reviews that may be conducted by CFP Board. It also includes the agreement to cooperate with CFP Board during the course of any inquiries or proceedings that CFP Board may undertake pursuant to CFP Board’s Disciplinary Rules and Procedures. Rule 6.2 restates the terms under which CFP Board grants CFP® certification only to those who meet initial and ongoing requirements: “A certificant shall meet all CFP Board requirements, including continuing education requirements, to retain the right to use the CFP® marks.”

While the obligations stated in Rules 6.1 and 6.2 are not new to the requirements for CFP® professionals, Rule 6.3 introduces a new requirement: “A certificant shall notify CFP Board of changes to contact information, including, but not limited to, e-mail address, telephone number(s) and physical address, within forty five (45) days.” It is important for CFP Board to have updated contact information for all certificants so policy updates and other important information may be communicated in a timely manner.

It is also important for certificants to communicate other information to CFP Board in a timely manner, especially when that information relates to matters that may involve potential violations of the Standards of Professional Conduct. Rule 6.4 identifies certain serious matters that must be disclosed to CFP Board within ten calendar days:

A certificant shall notify CFP Board in writing of any conviction of a crime, except misdemeanor traffic offenses or traffic ordinance violations unless such offense involves the use of alcohol or drugs, or of any professional suspension or bar within ten (10) calendar days after the date on which the certificant is notified of the conviction, suspension or bar.

The final Rule of the Rules of Conduct states perhaps one of the broadest and most important obligations CFP® professionals hold to CFP Board, as well as to their colleagues. Rule 6.5 states, “A certificant shall not engage in conduct which reflects adversely on his or her integrity or fitness as a certificant, upon the CFP® marks, or upon the profession.” CFP® certification is increasingly singled out as an important credential the public should look for when seeking financial planning services. That reputation has been built over many years through the diligent work of thousands of CFP® professionals across the country. It is important for all CFP® professionals to take personal responsibility to ensure that their actions reflect the Principles of the Code of Ethics and Professional Responsibility – Integrity, Objectivity, Competence, Fairness, Confidentiality, Professionalism and Diligence – for their own sake as well as the reputation of their peers and the entire financial planning profession.

If you have questions about the revised Standards, please contact CFP Board at standards@CFPBoard.org.

About the Revised Standards of Professional Conduct:
On May 31, 2007, CFP Board’s Board of Directors announced the adoption of a revised version of CFP Board’s Standards of Professional Conduct, which sets forth the ethical standards for CERTIFIED FINANCIAL PLANNER™ professionals. The revised Standards become effective July 1, 2008 and apply to the more than 56,000 financial planners in the U.S. who are authorized by CFP Board to use the CFP® certification marks. CFP Board encourages CFP® professionals to begin applying the revised Standards to their daily practice well in advance of the July 1, 2008 effective date.

November 2007 Exam Results Released

Score results for the November 2007 CFP® Certification Examination were recently released to exam takers. The 10-hour, two-day exam was conducted at 50 sites nationwide. Of the 2,764 individuals who sat for the November 2007 exam, 1,670 passed, representing a pass rate of 60%. CFP Board's CFP® Certification Examination requires full integration of knowledge covered in CFP Board's financial planning topic list and is designed to assess a person's ability to apply financial planning knowledge to real-life financial planning situations.

The next exam will be held March 28 and 29, 2008. The application deadline for the March 2008 exam is February 6, 2008. Read more about the CFP® Certification Examination.

Updated Standards of Professional Conduct Booklets Available

Booklets containing CFP Board’s updated Standards of Professional Conduct, which takes effect July 1, 2008, are now available. The updated Standards, along with the education, examination and experience requirements for CFP® certification, are designed to assure the public that the professionals who display the CFP® marks are qualified to provide competent and ethical financial planning services and dedicated to putting the interest of their clients ahead of their own.

When the updated Standards takes effect on July 1, 2008, all CFP® professionals will be required to abide by the updated requirements. Additionally, all continuing education (CE) programs covering the ethical standards for CFP® professionals will be required to cover the updated Standards before July 2008, and the CFP® Certification Examination will cover the updated Standards beginning with the July 2008 exam.

Last month, a copy of the booklet was mailed to all CFP® professionals, directors of CFP Board-Registered Programs and continuing education sponsors registered with CFP Board. A downloadable version of the booklet is available online at: www.CFP.net/downloads/2008Standards.pdf

If you have not received a copy of the updated Standards booklet and wish to have one mailed to you, please verify that your preferred mailing address in listed in CFP Board’s records by logging in to your online CFP Board account at www.CFP.net/login. After you’ve verified your mailing address, contact us at mail@CFPBoard.org to request a copy of the booklet.

Julie T. Heil Joins CFP Board as Director of Examinations

CFP Board welcomes Julie T. Heil as its new Director of Examinations. Ms. Heil has extensive experience in test development, including the development of certification examinations for CFP Board during her time at the Chauncey Group International (now known as Prometric), a leading provider of certification and licensing examinations for professionals, businesses, and government.

Ms. Heil comes to CFP Board from the American Institutes for Research, where she worked with the Ohio Department of Education, overseeing the development of content for grade K-8 tests in reading, writing, science, social studies and mathematics. Previously Ms. Heil worked at the Chauncey Group International, where she was the senior test developer for the certification examinations for CFP Board as well as other organizations. She holds a Bachelor of Arts degree from St. Joseph’s University as well as advanced degrees from West Chester University and Widener University. In her role as Director of Examinations, Ms. Heil will have oversight for the development of the CFP® Certification Examination.

“Julie’s hands-on experience with the entire process of test development, and her familiarity with the CFP® Certification Examination, makes her an ideal choice for CFP Board’s new Director of Examinations,” said Carol Lee Roberts, CFP®, Managing Director of Examinations and Education. “Her expertise will help ensure that the CFP® certification exam continues to meet the high standards of competent and ethical financial planning administered by CFP Board for the benefit of the public that seeks financial planning services.”