People are hungry for financial planning. You could see that hunger in the eyes of the hundreds of people lined up at the Los Angeles Convention Center last Friday to enter CFP Board's first Financial Planning Clinic. They came early - some several hours early - and waited patiently for a chance to speak with a CFP® professional about their financial questions. Some were struggling with debt. Others had multi-million dollar portfolios. They all had a need for information and advice from a financial planning professional.

Financial planning is satisfying. You could see the satisfaction in the expressions of the public as they left the Financial Planning Clinic with ideas that could improve their financial lives. You could also see the satisfaction on the faces of the CFP® professionals who graciously volunteered their time and expertise to assist with the Clinic. And that's something I noticed at all of the different meetings that comprised CFP Board's inaugural Annual Meeting. Whether the meeting attendees were CFP® practitioners, educators, representatives of other financial planning organizations, or grant award recipients, it's obvious that financial planning allows for great professional growth and personal satisfaction.

Although CFP Board's 2006 Annual Meeting has concluded, we're not done with Los Angeles. We'll be working on strengthening our relationships in the area in the upcoming months, including relationships with the media outlets that helped draw so many consumers to our financial planning event. The process of financial planning can't change someone's life in only one session, and we want to make sure that financial planning information and resources remain available to those who recently got a taste of what it can offer.

And as CFP Board begins planning its 2007 Annual Meeting, we hope you'll let us know how we can entice you to join us in Boston next August. If you attended this year's meetings and have comments on things you liked or suggestions for things that could have been done more effectively, please take the time to complete the online survey that will be sent your way in the next few days.

Sarah Ball Teslik

On July 24, 2006, CFP Board released an Exposure Draft of proposed revisions to its Code of Ethics and Professional Responsibility and Financial Planning Practice Standards for a 60-day public comment period, sending notification by e-mail to all CFP® certificants, program directors and CE sponsors. The Exposure Draft was simultaneously released to media outlets around the country and has received substantial attention from the press.

The proposed revisions are contained in the Exposure Draft and summarized in an Overview, both of which are available for review on CFP Board's Web site at www.CFP.net/aboutus/Exposure_Draft.asp. Written comments may be submitted prior to September 25, 2006, and the Board will consider information received during this comment period at its October 2006 meeting and decide what further action to take with the proposed revisions.

CFP Board encourages all CFP Board stakeholders to review the proposed changes and provide written comments by the September 25, 2006 deadline.

CFP Board held its 2006 Annual Meeting the first week of August in Los Angeles and Santa Monica, bringing together all of CFP Board's stakeholder groups for insights from notable speakers, educational sessions on a wide range of financial topics, and plenty of opportunities to network with CFP® certificants and others whose lives benefit from financial planning.

Included in the Annual Meeting events were the annual Program Directors Conference, the Firm Meeting and a chance for the Board of Governors to hold in-person meetings with the full Board of Examiners and Board of Professional Review for the first time.

The Annual Meeting also introduced CFP Board's first large-scale public meeting, with a financial education and planning event open to the public and all of CFP Board's constituents at the Los Angeles Convention Center on August 4, 2006. More than 75 media outlets, including ABC, CBS, Univision, NBC's Telemundo, The LA Times and The Daily Breeze, helped promote the event to consumers via television, radio and newspaper interviews, public service announcements, print and online articles, print and online community calendar placements, chat room postings and online banner placements. And the media outreach worked! The event drew thousands of consumers who learned about the benefits of financial planning.

CFP Board plans to continue its media outreach in the Los Angeles area and take advantage of the momentum built around the 2006 Annual Meeting to cultivate ongoing awareness of the importance of financial planning.

Read on for highlights of CFP Board's experiment in bringing diverse groups together for a week of financial planning-related events.

Program Directors Conference: A Roadmap for Advancing Educational Standards

CFP Board's Program Directors Conference on August 2 and 3, 2006, brought together a record number of individuals from around the country who are involved in the administration of educational programs that fulfill the education requirement for CFP® certification. The attendees learned about the latest methods and research related to providing and managing financial planning education programs and shared their expertise with colleagues. This year's conference also included a presentation and discussions with SEC Commissioner Roel Campos, who provided insights into how educational institutions can prepare new financial planners to best serve their clients in the current regulatory environment.

Program directors received updates on the modifications to the Model Curriculum required by the recently-updated financial planning Topic List and were among the first to receive the report of the Education Task Force, which will soon be released for comments. The meeting was also attended by representatives of Financial Planning Standards Board Ltd. (FPSB), which owns the CFP® certification marks and promotes CFP® certification outside the U.S., including representatives of FPSB members from around the world, including Japan, Hong Kong, South Africa, Korea, China, Chinese Taipei and Canada. Noel Maye, CEO of FPSB, also led a roundtable discussion about the successes and challenges of creating, delivering and promoting financial planning education internationally.

CFP Board thanks the many program directors and distinguished guests who prepared presentations for this valuable educational experience for educators.

Firm Meeting Tackles Tough Topics

On August 2, 2006, an unprecedented number of representatives of major employers of CFP® professionals joined CFP Board in Santa Monica to engage in a full day of off-the-record discussions and debate over industry issues of mutual interest.

Karen Schaeffer, CFP®, Chair-Elect of CFP Board's Board of Governors, kicked off the meeting by asking each person to share opinions about what needs to occur to make financial planning profession everything it can be ten years from now. The wealth of ideas generated by this discussion ranged from the desire for a shift in the regulatory environment to requests and suggestions for demystifying what financial planning is, achieving greater coordination and unity among the organizations and persons involved in the financial planning profession, making current financial planning models more productive, designing and implementing different models to make financial planning accessible to the non-wealthy, and continuing the efforts to increase awareness of the CFP® marks.

The seriousness and depth of the discussions continued throughout the day as the meeting tackled such topics as the SEC's Broker-Dealer Rule, CFP Board's disciplinary process and the recently-released proposed revisions to CFP Board's ethical standards. Former SEC Commissioner Cynthia Glassman brought a Washington insider's view to the meeting by opening up the floor to questions and providing answers based on her four years of experience with the SEC. While at the meeting, Ms. Glassman's nomination to become Undersecretary of Commerce was announced by the White House.

We hope that all Firm Meeting attendees found the event to be as useful and dynamic as it was for CFP Board.

General Session Packed with Great Speakers

The General Session at the Los Angeles Convention Center on August 4, 2006, included speakers and events for everyone - presentations from notable speakers on topics of general interest, educational breakout sessions on specific financial topics, continuing education sessions for CFP® professionals, and more!

While the presentations from the three keynote speakers weren't specifically about financial planning, each presentation elaborated on what Barton C. Francis, CFP® , Chair of CFP Board's Board of Governors, identified as a theme of building bridges and providing knowledge that touches people's lives. Queen Noor shared stories from her recent trips to the Middle East and experiences from her efforts to improve the lives of women and families in Jordan. She noted that everyone everywhere has the problem of planning for the future and that financial stability is the foundation for political stability. Senator Bob Kerrey, now President of The New School in New York City, provided an analysis of the similarities between college presidents and financial planners, noting that both professions have the potential to help build character, including believing in the future, delaying gratification, establishing independence, understanding the nature and meaning of value, and learning generosity and selflessness. Rounding out the presentations, former SEC Commissioner Cynthia Glassman presented her perspectives on the SEC's recent undertakings to improve its protection of consumer interests.

The incoming CEO of NASD, Mary Schapiro, was the keynote speaker at lunch. Ms. Schapiro described the role of NASD as the self-regulatory organization for broker-dealer and investment advisers and provided her insight into the future of the regulatory environment. In the question and answer session that followed her speech, Ms. Schapiro indicated that she did not believe the United States would see during our lifetimes a "super regulator" such as is present in other countries such as the United Kingdom.

CFP Board was fortunate to assemble a group of top-notch presenters for the afternoon breakout sessions. The standing room-only crowds at the presentations by Louis Barajas, CFP® and Harvard Professor of Economics David Laibson were one sign that the breakout sessions covered topics of importance and interest. Consumers also learned important information about mutual funds from Mercer Bullard of Fund Democracy and about mortgage loans from "The Mortgage Professor" Jack Guttentag, as well as helpful information about the expenses young people face when first leaving home from Board of Governors member Dan Candura, CFP® . Individuals thinking of beginning financial planning careers were able to gain valuable insights and guidance from engaging presentations by Sally Hass of Weyerhaeuser and Board of Governors members Marilyn Capelli Dimitroff, CFP® and David G. Strege, CFP®.

Those concerned with the financial education of young people received updates from Robert Duvall on the current activities of the National Council for Economic Education, as well as information from Charlie Katz of the National Academy Foundation on the exciting collaborations financial planners are developing with inner city high school students. CFP® certificants and financial planning educators were able to learn more about current research being conducted by TwoMedicine Health & Financial Fitness on the hot topic of the interrelation of financial fitness and physical health and learn more about Myfinancialadvice, Inc.'s projects to reach middle America with affordable financial planning by using technology effectively. And even at the end of a full day of events, Elisabeth Donati of The Money Camp managed to get an audience to its feet with her interactive presentation of ways to help fix the financial literacy crisis, including effective demonstrations of the accelerated learning techniques that have helped The Money Camp change people's financial lives.

CFP Board Reaches the Public through Free Financial Planning Clinic

CFP Board's inaugural free Financial Planning Clinic was a resounding success! Nearly 1,000 consumers from the Los Angeles Metro area and beyond stopped by the Los Angeles Convention Center on Friday, August 4, 2006 to sit down and speak with volunteer CFP® professionals about their finance-related questions, concerns and curiosities.

Before the Clinic opened, crowds of people waited eagerly in line at the entrances to the 8,530 square-foot meeting space, and as soon as the doors opened, the meeting hall was filled to capacity and remained full for the duration of the Clinic. Not a single person left the Clinic without consulting at least one volunteer, and many were able to consult several of the volunteers stationed at the 60 tables. While each table was assigned a different financial topic - such as retirement planning, investment strategies, tax planning and debt management - the volunteers all answered a broad range of questions and, needless to say, remained busy.

Many of the volunteer CFP® certificants expressed how much they enjoyed participating in the Financial Planning Clinic and how much fun they had interacting at such a personal level with so many consumers. This feat would not have been possible without the generosity of the more than 100 CFP® professionals willing to spend their Friday afternoon helping and making a difference in the lives of so many people. CFP Board would like to express its heartfelt gratitude and appreciation to each of the volunteers for helping to make this event not only possible, but successful.

Board of Governors Meeting

The Board of Governors held the second session of its business meeting in a session open to the public. Recognition was given to Neal McNeil, III, CFP®, the individual who took the number of CFP® certificants in the U.S. past the 50,000th mark, and grant awards were presented to Brett Danko, CFP®, David Hernandez of Bronx Community College, Jeri Ajayi of ColoradoSaves, Angela Harper, CFP® of the Dallas/Fort Worth FPA Chapter, Karen Kispert of Indian Valley Housing Corporation, Marlene D. Warner of Massachusetts Council on Compulsive Gambling, Vicki Van Horn, CFP® of the New Mexico Project for Financial Literacy, Mike Boyd, CFP® of NorthwoodsSaves, Todd Schafer of Pacific Community Ventures, Richard Conn of Partners in Housing, Saundra Davis of Sage Financial Solutions, and Tim Clegg, CFP® of Solutions CDC, Inc.

In addition to regular governance business, the Board invited five speakers to provide comments regarding the recently-released proposed revisions CFP Board's ethical standards. CFP Board wishes to thank James Barnash, CFP®, Chair of the Board of Directors of the Financial Planning Association, Elaine Bedel, CFP®, Chair of the Board of Directors of Financial Planning Standards Board Ltd., Peggy Cabaniss, CFP®, Chair of the National Association of Personal Financial Advisors, Rick Linsday, President-Elect of the Society of Financial Service Professionals and Patricia Struck, President of the North American Securities Administrators Association, for their thoughtful comments.

The meeting closed with Chair-Elect Karen Schaeffer, CFP® presenting an award certificate to Barton C. Francis, CFP® for his service as Chair, a position he inherited several months early when the prior Chair became ill.

2007 Annual Meeting

Plans are already being made for CFP Board's 2007 Annual Meeting, which we anticipate will be held in August 2007 in the greater Boston area.

We welcome comments about the 2006 Annual Meeting and suggestions for improving future meetings. All those who registered for the 2006 meeting will soon be asked to complete an online survey. Those who were unable to attend the 2006 meeting are invited to send suggestions to mail@CFPBoard.org.

CFP Board has awarded a total of $875,567 in grant funding to 20 projects that are developing innovative and sustainable methods of bringing the benefits of financial planning to communities not traditionally reached by the financial planning profession.

The grant funding was awarded through CFP Board's first major grants program and announced at CFP Board's Annual Meeting in Santa Monica on August 5, 2006. The public focus of this grant program furthers CFP Board's mission to help people benefit from competent, professional and ethical financial planning.

The recipients of CFP Board grant funds are listed below, and additional information about the projects is available on CFP Board's Web site. Grant recipients will be featured in CFP Board's newsletters over the coming year, beginning below with the profile of the New Mexico Project for Financial Literacy.

Bronx Community College (Bronx, N.Y.)
ColoradoSaves (Denver, Colo.)
Brett Danko, CFP® (Lawrenceville, N.J.)
Financial Planning Association Chapter of Dallas/Fort Worth (Texas)
Financial Planning for Women, Utah State University (Logan, Utah)
Friends of the Finance Academy (Pine Bush, N.Y.)
Indian Valley Housing Corporation (Souderton, Pa.)
Massachusetts Council on Compulsive Gambling (Boston, Mass.)
New Mexico Project for Financial Literacy (Rio Rancho, N.M.)
Nokomis Learning Center (Okemos, Mich.)
NorthwoodsSaves (Rhinelander, Wis.)
Pacific Community Ventures (San Francisco, Calif.)
Partners in Housing (Colorado Springs, Colo.)
Prosperity Life Planning (Delray Beach, Florida)
Sage Financial Solutions (Pinole, Calif.)
San Mateo Public Library (San Mateo, Calif.)
Solutions CDC (Holyoke, Mass.)
University of California, Irvine Distance Learning Center (Irvine, Calif.)
Wisconsin Women's Business Initiative Corporation (Milwaukee, Wis.)
Women's Crisis and Family Outreach Center (Castle Rock, Colo.)

Not long ago, Vicki Van Horn, CFP® was in Gallup, New Mexico, where she met a woman who was struggling to pay off her mother's debts. The woman's mother, who was recently deceased, had taken out a string of payday loans and had gotten in over her head with credit cards. What the woman didn't realize, though, was that she was not legally responsible for her mother's debts and was under no obligation to pay them off. It's a typical example, Van Horn says, of how ignorance of basic facts can lead to poor financial decision-making. And it's exactly the kind of situation that Van Horn's New Mexico Project for Financial Literacy, Inc. (NMPFL) was founded to correct.

New Mexico has some of the most stunning scenery in the United States. It also has some of its most entrenched multi-generational poverty. Just over 18% of the state's two million residents live below the poverty line, compared to a national average of just over 12%. At $25,541, New Mexico has the lowest per capita income in the country; the national average is $31,623. The hardest hit by these statistics are single women with families (over 46% of births are to single mothers) and the state's large Hispanic and Native American communities. "We want New Mexicans to be able to make more informed decisions," says Van Horn, NMPFL's executive director. "We want them to have more confidence, and to have resources to turn to when they don't have the financial knowledge they need."

A grant from CFP Board will help NMPFL do just that. With funds provided by CFP Board, Van Horn and her colleagues are setting up a network of financial self-study groups across the state. The groups will meet monthly to share practical information on everything from avoiding predatory lenders to identifying strategies to increase income. The network is primarily intended to serve women, especially single moms and those who suddenly find themselves the head of a one-income household. These women-many of whom are recently widowed, divorced, separated or fleeing domestic violence-often have little or no knowledge of how to handle money. "The groups will teach people skills like how to rebuild their credit, get out of debt, prioritize their finances and protect themselves against identity theft," Van Horn explains. The groups will largely be responsible for administering themselves, while NMPFL provides guidelines for the meetings, curriculum materials and answers to personal financial management questions.

NMPFL also intends to set up an innovative micro-lending scheme through the self-study groups. These short-term, interest-free loans will be small (anywhere from $50 to $300) and earmarked to help people out of immediate financial difficulty or assist in starting a business. One goal is to bypass the predatory lenders-which can charge up to 700% interest on similar loans-that have proliferated in New Mexico. The city of Gallup, for example, has the dubious distinction of supporting the highest per capita number of predatory lenders in the country: one for every 808 residents. Each group receiving money for micro-loans will be required to prepare a monthly report for NMPFL on how it has allocated its funds.

"Most New Mexicans know how to buy a pickup truck or a wide-screen TV," says Van Horn, "but many don't know what a mutual fund is or how to balance a check book. And in a lot of cases, people 'know' things that are simply untrue. We try to see what the most urgent needs are, and then pick the points where we can have the most impact." That impact could be great if NMPFL's self-study groups can replace misinformation-like the Gallup woman's belief that she was responsible for her deceased mother's debts-with basic financial facts and a little bit of critical thinking. It's like what Van Horn's mother used to say, quoting Mark Twain: "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."

My wife and I were driving to a party in southern Wales not long ago when smoke started pouring from the front of our car. Driving in southern Wales, which is about five hours due west of London in the United Kingdom, is a tricky business. Picture your sheets after you get out of bed in the morning; that's how hilly and convoluted the Welsh landscape is. Even the shortest car journeys can be a challenge. It's remote and isolated, too. So when we pulled over to see what was causing the smoke, I was both upset and worried-upset that we were going to miss the party and worried that we would be stuck in the middle of nowhere for the night.

Of course, I had never bothered to join the British equivalent of AAA. Our car was well maintained and I was such a good driver that we would surely never require the insurance (and reassurance) against breakdown that AAA provides. Well, we managed to get in touch with the automobile association right away-a mechanic reached us within an hour and told me that the steep hills had been burning up the brakes-and I joined the organization on the spot. I've been a member ever since.

Turns out that I'm pretty typical when it comes to estimating risk. "Before an event, people are convinced 'it can't happen to me,'" says Howard Kunreuther, a leading expert on risk and co-director of the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania. "After an event, people are convinced 'it will definitely happen to me,' even though the probability of that event happening again might actually be less." That perfectly describes my decision-making process. Even though it's unlikely that my car will break down again in southern Wales (or elsewhere, for that matter), I am not willing to take the risk. So I am willing to pay for the insurance of AAA.

The tendency of people to tune out what Kunreuther calls "low-probability, high-consequence events" is the reason why so many of us delay buying insurance until it's too late. "After a disaster, the perception of risk is heightened," Kunreuther explains. "That's why people buy earthquake insurance after an earthquake. But risk only stays on a person's agenda for a short time. As distance from the event increases, awareness decreases. And that's why, if there hasn't been an earthquake in five years or so, people will cancel their insurance."

So how can consumers make better decisions about whether to insure themselves against risk? According to Kunreuther, the first step is to "get the best data you can to determine the likelihood and consequences of something happening. Then decide what level of risk you can live with." If you live in an earthquake zone in California, for example, then earthquake insurance should be a no-brainer. But Kunreuther's research shows that even when the risks are well documented, people still don't take the necessary steps to protect themselves. Hurricane Katrina is a case in point. Many Louisiana and Mississippi residents only discovered after the storm that they were not covered for flood damage, even though the threat to the area was well known.

Our capacity for ignoring risk is prodigious. We often prefer not to see dangers rather than to see them and be prepared for the worst. That's why Kunreuther suggests that any discussion of risk be accompanied by probability information that people can actually understand. "People need a context in which to evaluate the likelihood of an event occurring," he says. Kunreuther cites the example of a company considering whether to purchase earthquake insurance: "If the company is considering earthquake protection over the 25-year life of its plant, managers are far more likely to take the risk seriously if they are told the chance of an earthquake is 1 in 5 during the entire period rather than 1 in 100 in any given year."

"People can tend to regard insurance not as a protection but as an investment," Kunreuther says. From that point of view, "the best return is no return." That's the paradox of insurance: you buy it in the hope you'll never need it. Like breakdown insurance for my car; nowadays, I don't leave home without it.

- James Geary

Dr. Andy Terry and Dr. Ashvin Vibhakar from the University of Arkansas at Little Rock and Dr. David Cordell, CFP® from Texas Tech University are seeking participants for a research survey of CFP® certificants. The survey is designed to gather information related to CFP® certification, business and compensation practices, and investment and portfolio management practices. The survey is available here. The brief survey should take only a few minutes to complete and will remain open until September 10.

This research project follows and extends previous research conducted by Dr. Terry and Dr. Vibhakar entitled "A Comparative Analysis of the CFA and CFP® Designations," forthcoming in the Fall 2006 Advances in Financial Education. A copy of the paper may be obtained from the authors upon request.

If you have questions or comments about the survey, or if you would like a copy of the previous paper, please feel free to contact the authors.

David M. Cordell, Ph.D., CFA, CFP® , CLU
Associate Professor of Personal Financial Planning
MS 41162
Broadway at Akron, COHS 260
Texas Tech University
Lubbock, TX 79409-1162
806-742.5050, ext. 233
806-742-5033 fax
David.Cordell@ttu.edu
 
Andy Terry, Ph.D., CPA
Associate Professor of Finance
College of Business
University of Arkansas at Little Rock
2801 S. University
Little Rock, AR 72204
501-569-8872
501-569-8868 fax
haterry@ualr.edu
 
Ashvin Vibhakar, Ph.D., CFA
Professor of Finance and Director, Institute of Economic Advancement
College of Business
University of Arkansas at Little Rock
2801 S. University
Little Rock, AR 72204
501-569-8471
501-569-8868 fax
apvibhakar@ualr.edu

Myfinancialadvice, Inc. recently announced the results of a new survey that reveals an eightfold increase in adoption of Health Savings Accounts (HSAs) when consumers have access to expert financial advice. The survey identifies the confusion that surrounds HSA decision making, and suggests that employees' understanding of HSAs and their ability to make sound adoption decisions increased substantially after receiving a consultation by a financial planner.

Myfinancialadvice completed the nationwide survey of 123 CERTIFIED FINANCIAL PLANNER™ professionals with the cooperation of CFP Board.

Survey respondents who offer HSA consultation indicated that approximately 88% of their clients who adopted HSAs would not have done so without financial advice. Similarly, surveyed advisors believe on average that more than 60% of corporate employees will require help in evaluating HSAs as a healthcare option when offered in the workplace.

According to Ron Peremel, CEO of Myfinancialadvice, these figures are consistent with input from corporate sponsors and other studies, noting that a substantial proportion of HR managers expect HSAs and other consumer-directed health plans to cause confusion for employees and believe that financial planning is important to the success of these plans. "Financial planners may be in the best position to realize the magnitude of this need because they work directly with clients who must make essential decisions about their family's health and wealth issues," Peremel said.

Other key findings from the survey reveal that of the CFP® professionals that advise clients on HSAs: 94% rated their clients' understanding of HSAs as being confused and unable to make sound HSA adoption decisions prior to receiving a financial consultation, and 89% indicated that their clients' ability to make sound HSA decisions increased significantly upon receiving a financial consultation.

The survey respondents cited what they perceive to be the top five obstacles to employee adoption of HSAs:

• General confusion surrounding HSAs: 73%
• Fear of High Deductible Plans: 69%
• Fear of change: 49%
• Ability to fund HSA: 34%
• Difficulty understanding savings feature: 33%

HSAs require employees to address a daunting array of issues, including cost effectiveness versus traditional plans, contribution guidelines/limitations, 'qualified expense' guidelines, tax treatment of contributions and withdrawals, appropriate contribution levels, investment selection, and long term financial planning strategies.

Peremel commented, "There is no reason to believe that employees who traditionally have struggled to make 401(k) deferral and asset allocation decisions will magically prove to be adept at deciphering the complex financial decisions associated with HSAs."

Peremel continued: "Many sponsors have reported that direct financial advice has helped to increase 401(k) participation, and this survey of CFP® professionals strongly suggests that direct financial advice will serve the same purpose in the HSA world. The stakes are high for both employers and employees. If access to independent, unbiased financial advice significantly increases the appropriate adoption of HSAs, employers may finally enjoy tangible savings on their health care plans."

"It is important for corporate employers and employees to appreciate the complexities involved in HSA decisions," said Sarah Teslik, CEO of CFP Board. "This study clearly shows that employees in the workplace stand to realize significant benefits when they are provided access to expert, financial advice from qualified professionals."

Full survey results may be obtained by contacting Myfinancialadvice at 303-395-3355 x120 or info@myfinancialadvice.net.