Repeating CFP Board’s mission statement may not be the catchiest way to start my message this month, but I’ll do it anyway:

The mission of Certified Financial Planner Board of Standards, Inc. (CFP Board) is to help people benefit from competent, professional and ethical financial planning.

To further this mission, CFP Board works to:

• Create and enforce uniform standards of competence, practice and ethics of financial planners through rigorous, validated and professionally administered education, examination, experience and ethics requirements.
• Create awareness of the importance of financial planning and the value of the financial planning process.
• Help underserved populations have access to competent and ethical financial planning.

It’s a reasonably concise statement — my software counts it at just below 90 words, even if it uses a few strings of adjectives and repeats the words "competent" and "ethical" several times. It even holds a little complexity, with feel-good words like "help" and "benefit" sitting near less-friendly words like "enforce" and "rigorous." I’ll admit it isn’t the type of statement you find yourself humming as you pick up dishes after dinner. But low hum-factor aside, it is a statement that bears repeating, especially for the way it illustrates how CFP Board’s Board of Directors approaches its work.

CFP Board’s mission is more than a combination of words and phrases. It’s something CFP Board and its representatives use as a touchstone for our work and discussions. The Board of Directors may not hum CFP Board’s mission statement at its meetings, but we do read it and quote from it as we review CFP Board’s activities and plans for the future. We’ve made concerted efforts to ensure that our work, and the work of CFP Board’s staff, is aligned with CFP Board’s mission. We believe financial planning is a distinct profession with the potential to make positive changes in a person’s life when the financial planning process is applied in an ethical and competent manner, and our focus is on the ways CFP Board can best serve the public by setting standards that enhance American consumers’ chances of receiving competent and ethical financial planning.

With the announcement of a new CEO, a decision to move CFP Board’s headquarters across the country from Denver to Washington, D.C., and the adoption of revisions to the ethical standards for CFP® professionals, CFP Board has introduced a lot of change in the past few months. My intention is not to introduce another change here. What I’d like to do is repeat CFP Board’s open invitation for feedback from CFP Board’s stakeholders. Whether you’re currently working to obtain CFP® certification, are a distinguished member of the financial planning profession who has held CFP® certification for 20 years or more, are supporting CFP® certification by providing educational or employment opportunities to CFP® professionals, or are someone who has experienced financial planning as the client of a CFP® professional, you’ve been involved in furthering CFP Board’s mission and are a valuable resource for CFP Board.

The Board of Directors regularly engages in "strategic planning" to help focus its work on areas where it can best further CFP Board’s mission. With the addition of new leadership to CFP Board’s staff, the strategic planning we conduct this year will be especially important. We’ve already sought feedback from specific individuals and groups whom we expected to provide valuable input for the current strategic planning process. If you haven’t yet received or responded to a specific invitation, it’s not too late to share your thoughts and contribute to our planning.

We welcome feedback from all CFP® professionals and other CFP Board stakeholders, whether it be opinions about CFP Board’s recent activities or thoughts about future opportunities with the potential to further CFP Board’s mission. We appreciate notes letting us know where you think we’ve accomplished good work aligned with CFP Board’s mission; we also appreciate hearing your concerns when you think we’ve fallen short. If you have comments or suggestions you’d like to share with CFP Board’s Board of Directors, please send them to us by e-mail at BOG@CFPBoard.org or by mail to CFP Board, Board of Directors, 1670 Broadway, Suite 600, Denver, CO 80202.

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

A few months ago, I made a weekend visit to see my mother, who is almost 82. Though she’s slowed down considerably compared to even a few years ago, she is still in pretty good health. She stays reasonably active, has lots of friends and family close by, and likes living alone in the home she’s owned for nearly 40 years.

On the second day of my visit, I went out to do some shopping. I called my mother from the mall to tell her I would be back in about an hour, but she didn’t pick up the phone. That’s odd, I thought. I know she is home. Why doesn’t she answer the phone? I figured she must be taking a nap or something, so I finished my shopping and drove home.

When I got there, I discovered the screen door was locked. I had a key to the front door, but the screen door can only be unlocked from the inside. So I knocked. My mother didn’t answer. I knocked again, then again, louder and louder. Still no answer. So I frantically broke open the screen door and unlocked the front door to find my mother lying on the living room floor. She had fainted at some point after I left the house and, unable to stand up, had been waiting for me to get back ever since.

I called an ambulance and admitted my mother to the hospital. It turns out that a persistent infection had so weakened her that she just fainted. After a few days in the hospital, and a series of tests to make sure she hadn’t suffered a stroke, she was feeling much better and was able to go home again.

I was relieved that my mother was alright, and that there was nothing more seriously wrong. But I was also alarmed to see her so frail — to be confronted so graphically with her eventual mortality. And for the first time, I started to think about the financial consequences if she was no longer able to live alone and I needed to help support her care. I have a young family myself, school fees are going through the roof, and I really have to get serious about saving for my own retirement. How would I cope financially if something happened to my mom?

"We have something no other generation before us has had," says Neal E. Cutler, associate director of the gerontology program at the University of North Carolina at Greensboro, vice president of the American Institute of Financial Gerontology, and author of Advising Mature Clients: The New Science of Wealth Span Planning. "We can watch our parents grow old. And that makes for an enormous learning curve." That weekend was my first lesson in the practical realities of financial gerontology, the multidisciplinary field that brings applied research in aging and gerontology to financial service professionals.

With an elderly parent and small children of my own, I find myself in one of the younger layers of what Janice I. Wassel, director of the gerontology program at the University of North Carolina at Greensboro, calls the "senior sandwich generation." "Torn by current family commitments and the future unknowns of planning for their own retirement," Wassel writes in "Financial Planning and the ‘Senior Sandwich’ Generation" in the March 2006 issue of the Journal of Financial Service Professionals, people like me are "caught in a demographic trap of caring for multiple generations — their parents plus their children … This multiple-generation caring is made more demanding because they also are preparing for their own rapidly approaching old age."

Wassel’s article outlines some of the social and cultural trends — delayed marriage, delayed child-bearing, extended young adulthood, remarriage, increasing longevity — that are producing this sandwich. And she cites statistics that make clear the enormous size of this particular demographic delicatessen. In 1900, for example, only 39% of 50-year-olds had a living parent; by 1990, 80% did. Only 7% of 60-year-olds had at least one surviving parent in 1900; by 1990, 44% did. The oldest "members of the sandwiched middle generation are now in their 60s and even 70s," Wassel writes. "The increasing longevity of boomers and of their parents suggests that for aging boomers, one-third of their adult life (if not more) will be spent as an adult child with at least one parent aged 65 or older.… Financial professionals need to stay abreast of the dynamics that are reshaping traditional family structures and roles and to be prepared to design strategies for retirement and long-term financial security in the context of these changing family obligations." Cutler has come up with a way to help them do just that.

Cutler calls his method, described in "A New Tool for Family Financial Planning" in the November 2006 issue of the Journal of Financial Service Professionals, the "filial fraction" — the percentage of a person’s adult life that an older parent is also alive. To compute a person’s filial fraction, make the numerator the number of years the parent has been an "older person" (say, over the age of 65) and make the denominator the number of years the child has been an adult (over 20 years of age). Cutler gives us the hypothetical case of Steve, who is 60, and his mother Gladys, who is 90. Gladys has been an older person for 25 years, and Steve has been an adult for 40 years. Steve’s filial fraction is 25/40 years, meaning he’s had an older parent for around 63% of his adult life.

"The filial fraction is meant to quantify, and perhaps to dramatize, the increasing potential for greater financial responsibility falling on the shoulders of an increasing number of middle-agers," Cutler says. "It is a financial planning tool to help clients, especially middle-aging boomers, see the potential responsibilities they may have as a consequence of aging — their own as well as that of their parents. The filial fraction puts this question on the table in a quantitative way, and makes it something around which you can plan."

I’m only 44, and already my filial fraction is upwards of 70%. Looks like I need to get my hands around this senior sandwich business, before the potential costs of my and my mother’s aging start to eat my lunch!

- James Geary

About the American Institute of Financial Gerontology:
The American Institute of Financial Gerontology (AIFG) was established in 2002 to create a targeted educational program for financial service professionals who work with older individuals and families. The AIFG confers the Registered Financial Gerontologist™ (RFG) designation on professionals who advise older consumers and their families. CFP Board grants CE hours to CFP® professionals who obtain the Registered Financial Gerontologist™ credential offered by AIFG.

Douglas County, Colorado is one of the wealthiest counties in the U.S. It’s one of the most beautiful, too, nestled just to the east of the imposing Front Range of the Rocky Mountains. And in Douglas County, domestic violence is the no. 1 violent crime. The Douglas County Sheriff's Department recorded 700 reported cases of domestic violence in 2004, up 14% from 2003. Each of the five murders committed in the county in the first few months of this year was a case of domestic violence, according to Jennifer Walker, executive director of the Women’s Crisis and Family Outreach Center (WCFOC) in Castle Rock, CO. Of course, spousal abuse is a national problem. The U.S. Department of Justice estimates that between 900,000 and 3 million women are abused every year. CFP Board has awarded two grants — to the WCFOC and to Brett Danko, CFP® — to support work that is helping victims of domestic violence benefit from financial planning. The WCFOC is using its grant to assist women in achieving financial independence as they move towards a violence-free life.

Founded in 1985, the WCFOC operates a 12-bed emergency shelter and a 24-hour crisis hotline, as well as counseling, legal advocacy, and parenting classes for residents of the largely rural area of Douglas County, Colorado. With the grant funding from CFP Board, the WCFOC is also offering a monthly financial education series for around 100 women, four hours of one-on-one financial planning for 50 women, and some 500 workbooks about financial planning for victims of domestic violence. "We frequently see women who have never before been in charge of finances, or had access to the family finances," says Walker. "They may not know how to budget or balance a checkbook. They may be riddled with debt run up by the perpetrator and not even know it. They fear that if they leave their abusive partner, their financial stability will be shot."

The WCFOC tries to ease those fears by providing solid legal and financial information about everything from the division of assets after divorce to regulations around child and spousal support. "These women are often lied to by their abusive partners," Walker explains. ‘I bring home the bacon,’ they may say. ‘If you leave, you won’t get any money.’ So a big part of what we do is to dispel myths, to help women understand their rights in terms of marital assets."

At an initial crisis meeting, the WCFOC focuses on helping women realize what their rights are around the couple’s financial assets. When they take the first steps to free themselves from an abusive relationship, many women discover that their name is not on the deed to the house, they have no access to the checking account, and they are not the named beneficiary on any insurance policies. "A perpetrator often deliberately keeps a woman in the dark about finances in order to keep her financially dependent on him," says Walker. "The woman needs to understand that the house and the checking account are hers, too." Walker tells of one woman who used her newly acquired financial savvy to go through the financial records of her estranged husband; she ended up finding $60,000 he said he didn’t have.

The WCFOC also works to prepare women for financial self-sufficiency. So in addition to divorce-related issues, the seminars deal with immediate needs like budgeting and debt management as well as long-term needs like college funding and retirement planning. The one-on-one financial planning sessions are there for those women requiring more in-depth information on specific topics. "Partners in a relationship should be equals," Walker says, "but domestic violence is an inequality in power. Knowledge is power, and women need this financial knowledge to get ready for independent living."

Brett Danko, CFP®, is using his CFP Board grant to provide financial counseling, education and planning services to women served by domestic violence agencies throughout New Jersey. Danko has been involved in volunteer work with his local agency for some time, and has often been asked to intervene on behalf of clients with financial planning needs. "Clients in these programs don’t always see the agency as an appropriate place to raise financial concerns," Danko says, "but as many of them enter a more independent chapter of their lives, financial questions are definitely there." Danko answers those questions through the quarterly seminars he conducts around the state for victims of domestic violence. He addresses topics ranging from debt management to investment, and is on hand before and after the seminars to respond to individual questions.

"The biggest issue is cash flow," Danko says. "Many of the women who come to the seminars have had a career, and maybe stopped working [when they entered the abusive relationship]. The abusive spouse may have controlled the money, but at least they remember a time when they had their own checking and bank accounts. If they can understand their cash flow, where their money is going, and get a handle on credit card debt and distribution of assets, that gives them hope for tomorrow." Hope for tomorrow — that’s what Danko and the WCFOC are in the business of providing.

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

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CFP Board’s revised Standards of Professional Conduct, which becomes effective July 1, 2008, introduces several new phrases and terms to the ethical rules for CFP® professionals. One of the most important of those phrases is “material elements of the financial planning process,” which appears at four key places in the Rules of Conduct (Rules 1.2, 1.3, 1.4 and 2.2). It’s a pivotal phrase that determines the terms of the client engagement that must be put in writing, the disclosures that must be made to a client in writing, and the duty of care that a CFP® professional owes to a client.

The revised Standards outlines the primary factors that determine whether a CFP® professional’s activities are “material elements of the financial planning process” within the definition of “personal financial planning”:

“Personal financial planning” or “financial planning” denotes the process of determining whether and how an individual can meet life goals through the proper management of financial resources. Financial planning integrates the financial planning process with the financial planning subject areas. In determining whether the certificant is providing financial planning or material elements of the financial planning process, issues that may be considered include but are not limited to:

• The client’s understanding and intent in engaging the certificant.
• The degree to which multiple financial planning subject areas are involved.
• The comprehensiveness of data gathering.
• The breadth and depth of recommendations.

The final three bullets identify areas of the financial planning process that can be fairly easily measured: the number of financial planning topics covered during the engagement, the level of detail involved in the review of the client’s financial situation, and the comprehensiveness of the recommendations made to the client. The closer the services provided to a client approach the level of comprehensive financial planning, the more likely those services are “material elements of financial planning process.”

The first of the bullets may seem less clearly measurable, as it relates to the perceptions and understanding of the individual client. But elements of the client’s perceptions are well within the CFP® professional’s ability to monitor, including the way the client describes his or her desired services and the way the services are communicated and presented to the client. If a client specifically describes a desire for financial planning or services that encompass several steps of the financial planning process, or if the CFP® professional characterizes the services as financial planning, it’s not difficult to conclude that the client understands the services to be financial planning.

The definition of “personal financial planning” concludes with two important provisions: “Financial planning may occur even if the elements are not provided to a client simultaneously, are delivered over a period of time, or are delivered as distinct subject areas. It is not necessary to provide a written financial plan to engage in financial planning.” In situations where a CFP® professional provides a client a limited range of services that may not rise to the level of financial planning – perhaps opening a brokerage account and purchasing securities the client has specifically requested – but later expands the range of the services delivered to that client, the two sets of services cannot be considered separate. Services cannot be segmented or staggered to avoid reaching the level of financial planning. The entirety of the client engagement is to be considered when determining whether activities constitute financial planning.

CFP Board's Disciplinary and Ethics Commission (the Commission) has ultimate responsibility for reviewing specific situations to determine whether a CFP® certificant's activities rise to the level of "material elements of the financial planning process." When the Commission reviews situations that may or may involve financial planning, the determination of materiality is made as part of CFP Board's peer review-based hearing process. While financial planning encompasses a diverse range of activities, and it would be impossible to describe all the scenarios in which a CFP® certificant would owe the fiduciary duty of care to clients, the Commission has developed preliminary guidance to help CFP® professionals evaluate whether their services constitute financial planning. Activities that the Commission may consider to be material elements of the financial planning process include:

• Conducting detailed data-gathering regarding multiple aspects of a client's financial situation.
• Analyzing a client's data and making wide-ranging recommendations.
• Providing investment advisory services as defined by the SEC.

Activities the Commission may consider not to be material elements of the financial planning process include:

• A broker completing paperwork to open an account.
• Acting as an order-taker for brokerage services.
• Engaging solely in sales activity related to insurance products.
• Acting as a mortgage broker without providing any other financial services.
• Completing tax returns without providing any other financial services.
• Teaching a financial class or continuing education program.

These preliminary guidelines are examples and not an all-inclusive list. As we approach the July 1, 2008 effective date of the revised Standards, the Commission will be working to develop additional guidelines for identifying “material elements of the financial planning process.” If you have questions about “material elements” or any aspect of the revised Standards, please send them to CFP Board at mail@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 55,000 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.

Registration Now Open for 2007 Program Directors Conference

Registration is now available for the 2007 Program Directors Conference. CFP Board and FPA are working together to make this year’s conference an exceptional experience for all directors of financial planning education programs registered with CFP Board. The 2007 Program Directors Conference will be held September 7-8, 2007 as a pre-conference event at FPA Seattle 2007, the gathering of the global financial planning community at the Seattle Convention Center. The $350 registration for the Program Directors Conference also includes registration for FPA Seattle 2007 on September 8-11. For more information about the 2007 Program Directors Conference, including the current schedule of programs, visit CFP Board’s Web site at: www.CFP.net/conference.

The 2007 Program Directors Conference also includes exhibitor and sponsorship opportunities for groups that provide educational products or services, such as publishing, software and on-line services. Program Directors are the decision makers for many of the products and services purchased at their university programs, and exhibitors at the Program Directors Conference will have access to decision-makers from colleges and universities throughout the United States. To learn more about exhibitor and sponsorship opportunities at the conference, contact Victoria Hamilton at 800-322-4237 ext. 7144.

Employment Opportunities at CFP Board’s Washington Headquarters

CFP Board’s headquarters will move from Denver to Washington, D.C. by the end of 2007. The move brings with it exciting employment opportunities for individuals who understand the value of financial planning and who have the talent and energy to help shape the ongoing development of CFP Board’s mission. Key positions in the Washington office will require the subject matter expertise of CFP® professionals and/or financial planning educators. Learn more about available employment opportunities with CFP Board at www.CFP.net/aboutus/jobs.asp.

2007 Financial Planning Clinic in Boston: Final Days to Volunteer

CFP Board’s 2007 Financial Planning Clinic is fast approaching! Advertisements for the Clinic went up last month in Boston’s public transportation system, and media outlets in the Boston area are letting their audiences know about this exciting event. We’re seeing a steady increase in the number of people registered to attend the Clinic and expect to have a full crowd when the doors at the Sheraton Boston Hotel open on August 4.

To date, more than 150 CFP® professionals have volunteered to meet one-on-one with consumers who attend the Clinic and provide answers to their financial questions. We still have room for additional volunteers but need to finalize our roster within the next week. If you would like to participate in a rewarding event to help increase public awareness of the value of financial planning, please contact CFP Board at clinic@CFPBoard.org or 800-487-1497 no later than July 6, 2007.

If you are involved with groups or organizations in the Boston area that might be interested in providing their members or constituents with brochures or information about the Financial Planning Clinic, please contact CFP Board at clinic@CFPBoard.org or 800-487-1497.

Learn more about the Financial Planning Clinic at www.CFP.net/clinic.

Nominate an Adviser for the Community Leadership Awards

Do you know an adviser who has dedicated time and effort to improving their communities and to making a difference in the lives of others? If so, InvestmentNews wants to hear from you! InvestmentNews, in association with the Invest in Others Charitable Foundation, is now accepting nominations for the Community Leadership Awards. The awards will honor the philanthropic spirit of financial advisers and celebrate the charities they partner with. Winners and finalists will be featured in InvestmentNews, and the Invest in Others Charitable Foundation will donate $10,000 to each winner's charity of choice. Nominate an adviser you know or nominate yourself. Remember, your story could make a difference in the lives of so many others. Reward your charity by sharing your story. To learn more, call 212-210-0715 or visit: www.investmentnews.com/communityawards.