Sunday, July 8, 2007 was a good day for CFP Board’s stakeholders, with articles in two major newspapers mentioning CFP® certification prominently. It’s not unusual for personal finance writers to mention CFP® certification or feature interviews with CFP® professionals (visit the “CFP® Marks in the News” section of CFP Board’s Web site for a look at some fine examples). But these two articles highlighted important features of CFP® certification. I’m honored to have contributed to Jonathan Burton’s Wall Street Journal piece that aimed to help the public understand the distinction between the CFA (Chartered Financial Analyst) program’s intense focus on investment analysis and the broader understanding of personal finance issues required for CFP® certification, but I think the more significant of the two articles was Charles Duhigg’s piece in The New York Times.

Duhigg’s article, “For Elderly Investors, Instant Experts Abound,” features a cautionary tale of an elderly American who put her trust in a financial services provider who marketed himself with a designation that suggested expertise in the financial needs of seniors. The rest of the story is what you’d expect to see on the front page of a newspaper: trusting consumer; complex insurance products; big profits for the salesperson; big problems for the consumer. The article also addresses the ease with which certain credentials are obtained, as well as the scrutiny those designations are beginning to receive from all levels of government across the country. It includes a sidebar that highlights some of the “less rigorous” credentials that are being used to market financial services to seniors. Included for comparison are two “more rigorous” credentials: CERTIFIED FINANCIAL PLANNER™ certification and Chartered Financial Analyst.

At first glance, there’s just a simple alphabetical difference between CFA and CFP® certification. But the difference in the focus of the two certification programs is significant. And with the dozens of credentials that have proliferated in the financial services industry, and more added to the well-named “alphabet soup” each year, it becomes difficult for consumers to understand the different letters we put beside our names. It’s even harder for the public to understand which credentials require comprehensive training and rigorous standards and which credentials reflect little more than completion of a continuing education program.

I know I’m preaching to the choir when I say CFP® certification is not easy to attain and something that brings with it serious responsibilities. My memories of going through the program may have developed the nice, soft aura of nostalgia. The significance of the standards for CFP® certification still hits home every time I encounter financial planners who are challenging themselves to expand their knowledge of the ways financial planning can improve a person’s life. I’ve had the honor of hosting receptions that recognized the accomplishments of recently certified CFP® professionals, including a very proud family celebration when my daughter Kaitlin followed in her parents’ footsteps and earned the right to use the CFP® marks. Whether you hold the certification, teach those seeking to obtain it, or provide employment opportunities that make the most of the knowledge and skills of CERTIFIED FINANCIAL PLANNER™ certificants, CFP® certification is something all CFP Board’s stakeholders can and should be proud of.

I know I’m preaching to the choir once more when I say that growing numbers of people know they could benefit from professional financial planning help but don’t know where to seek it. Each month, CFP Board receives hundreds of requests for its “10 Questions to Ask When Choosing a Financial Planner” publication and consistently receives high marks for the value of the information in that non-promotional brochure. Nevertheless, we’ve all run across people who ask more than once what the CFP® mark after our name means. And we’ve all tried to answer questions about what it means that the financial service providers across town have different arrangements of the alphabet following their names. There’s a lot of confusion out there, and a great need to educate the public.

CFP Board has worked hard to educate the public about the value of CFP® certification and the standards to which CFP Board holds those of us who have achieved certification. Putting the CFP® marks beside our names signifies a notable professional accomplishment and an agreement to ensure that our work is focused on its benefits to our clients.

Many of you have made efforts to expand your knowledge beyond the broad knowledge of financial planning that is represented by CFP® certification, and I applaud that good work. I also understand there are substantial designations other than the CFP® marks that many of you have worked hard to obtain, and I have great respect for such accomplishments. There’s nothing misleading about sharing the credentials you’ve earned. But I challenge all CFP® professionals to evaluate the ways in which you present yourselves to potential clients. Do the letters you list after your name contribute to the “alphabet soup” in which the American public finds itself struggling to swim?

Regulators are showing increased interest in the ways financial professionals market themselves. Like the public, they are also learning to distinguish between the credentials that represent meaningful standards. Increasing numbers of regulators have taken notice of CFP Board’s focus on the public benefits of competent and ethical financial planning and the high standards for CFP® certification. CFP Board will continue its work to educate those evaluating the financial services industry about the value CFP® certification holds for the American public. My hope is that the community of CFP® professionals will support those efforts by displaying the CFP® marks proudly and, if they are displayed among other credentials, display them only beside credentials of significance.

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

Financial educators are increasingly going beyond the conventions of the PowerPoint presentation to impart financial information in more accessible and entertaining ways. CFP Board has awarded grants to two organizations — ColoradoSaves and the Dallas/Fort Worth Chapter of the Financial Planning Association — making innovative use of video technology to spread the financial planning message.

ColoradoSaves, part of AmericaSaves, the nationwide campaign to help individuals and families build wealth, is taking a dramatic approach to financial education. With its CFP Board grant, the organization is creating a video that dramatizes four different scenarios in which smart financial planning is crucial: a family living from paycheck to paycheck; a teenager working part-time while trying to save for college; an employee who is terrified at the prospect of retirement; and a family in an economic emergency. “Video is great medium through which to get our message across,” explains Jeri Ajayi, director of ColoradoSaves. “It’s just more fun. The video will be shown to employees in the workplace. And we want people to stay connected after seeing it, working through ColoradoSaves to use the concepts they have learned.”

Those concepts include financial planning fundamentals like setting goals, using credit wisely, saving for retirement, buying insurance, and budgeting. “The employer-based location is important,” Ajayi believes, “because it’s non-threatening and allows us to reach the greatest number of people. We will go to the workplace during lunch hour, show the video, and serve some refreshments. Financial educators and wealth managers will be there afterwards to talk to people individually, answer questions, and address problems. The goal is to increase the number of people in ColoradoSaves and help them start saving right away.”

The Financial Planning Association’s Dallas/Fort Worth Chapter thinks Latinos will respond particularly well to video. Latinos currently represent about 14% of the U.S. population, with some $686 billion in purchasing power, according to Exploring Personal Financial Challenges and Opportunities Facing Latino Immigrants, a white paper produced by the National Endowment for Financial Education. But they also have some specific cultural needs when it comes to financial services. Latinos tend to prefer a customized, personal approach rather than the generic, one-size-fits-all model offered by many service providers. In addition, many have what Mario Yngerto, a CFP® professional with Genesis Wealth Management, Inc. and president-elect of the FPA’s Dallas/Fort Worth Chapter, calls “a shoebox mentality. They are suspicious of banks and keep their savings in a shoebox under the bed.”

The Dallas/Fort Worth FPA Chapter is using its CFP Board grant to produce a DVD intended to increase the local Latino population’s comfort level with financial planning. The DVD will be created in a Meet The Press-style format: A panel of CFP® professionals will answer a series of basic financial planning questions, in both Spanish and English versions. The DVD will be distributed through local Hispanic television stations, posted on Latino Web sites, and given away free through Hispanic business and cultural organizations across the country. The relaxed, conversational tone of the program is designed to appeal to Latinos who may be turned off by a more formal approach.

“The DVD is aimed at three main groups,” Yngerto says. “First, there are the working poor; the program will introduce them to basics like how to open a bank account, use an ATM, apply for credit cards, and get health insurance. Then there are Hispanic couples who may have a kids; the DVD will help them evaluate mortgages and learn the difference between a stock and mutual fund. Finally, there are the older Hispanics who may be reasonably well-to-do but need some assistance on tax and estate planning.”

The Dallas/Fort Worth FPA Chapter’s initiative is a timely one, since the Dallas area’s Hispanic population has doubled over the last decade, making Latinos the city’s largest ethnic group. And there is still a lot of financial education to be done. Nationally, for example, a third of U.S.-born Hispanics and over half of all Mexican immigrants don’t even have bank accounts, according to the U.S. Census Bureau’s 2000 survey. That’s a lot of people the Dallas/Fort Worth FPA Chapter can start helping to think outside the shoebox.

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

Print This Article (PDF format)

Financial planning places great emphasis on the importance of goal achievement, and it’s no surprise that many believe the most important parts of the financial planning process are implementation and results. Those experienced with the financial planning process, however, know that the best outcomes can’t be reached without careful attention to the early steps of the process. Those early steps may in fact be the most important. Even in situations where a first meeting with a potential client does not involve detailed data-gathering or analysis of the person’s financial status, that meeting will set the foundation of a business relationship and create expectations for both the planner and client. Initial meetings may also be the most important time for a CFP® professional to embody the high ethical standards represented by CFP® certification. CFP Board’s revised Standards of Professional Conduct, which becomes effective July 1, 2008, includes many ethical standards that apply to contact with prospective clients.

Ethical standards for working with prospective clients are not a new addition to CFP Board’s Standards of Professional Conduct, which currently contains several Rules that apply to work with potential clients. While each of those current Rules are grouped under the principle of Fairness, the revised Standards make clear that other principles from CFP Board’s Code of Ethics also apply to prospective clients, including the principles of Integrity, Objectivity, Competence, Confidentiality, Professionalism and Diligence.

Prospective clients are mentioned specifically not only in five Rules contained in the new Rules of Conduct, but they also are made part of the headings for the first four sections of the Rules of Conduct:

1. Defining the Relationship with the Prospective Client or Client
2. Information Disclosed to Prospective Clients and Clients
3. Prospective Client and Client Information and Property
4. Obligations to Prospective Clients and Clients

Rules 1.1, 1.2 and 2.2 of the Rules of Conduct set forth the ethical obligations for the first step of the financial planning process. Rule 1.1 states, “The certificant and the prospective client or client shall mutually agree upon the services to be provided by the certificant,” and Rules 1.2 and 2.2 outline information that is important for the potential client to understand in order to make an educated agreement with the financial planner. That information includes such things as conflicts of interest, the obligations of each party, compensation arrangements and an identification of all parties that will be involved in delivering the services made part of the agreement. Those disclosures are currently required by CFP Board’s current Code of Ethics.

Rule 1.2 also introduces several important elements not contained in the current Code of Ethics. Some of these new elements require CFP® professionals to inform a potential client of the following:

• Factors or terms that determine costs.
• How decisions benefit the certificant and the relative benefit to the certificant.
• Terms under which the agreement permits the certificant to offer proprietary products.

Rule 2.1 of the revised Standards also introduces the requirement that a certificant “not mislead any parties about the potential benefits of the certificant’s service.” The revised Standards also make clear that CFP® professionals have an ethical duty to inform a potential client if they believe circumstances will prevent them from providing a certain service. As Rule 3.3 states, “A certificant shall obtain the information necessary to fulfill his or her obligations. If a certificant cannot obtain the necessary information, the certificant shall inform the prospective client or client of any and all material deficiencies.”

Each of these new requirements and restatements of existing requirements are designed to increase the ability of prospective clients to make educated decisions about whether they stand to benefit from the services of a CFP® professional. These standards also provide prospective clients with guidance on how to evaluate the recommendations they will receive as clients. CFP Board’s Standards of Professional Conduct requires that CFP® certificants display ethical conduct and professionalism from the start of their relationships with clients.

Questions about the revised Standards may be sent 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.

Michael P. Shaw, Esq. Joins CFP Board as Managing Director, Public Policy & Legal

Michael P. Shaw, Esq. has joined CFP Board in the newly-created position of Managing Director, Public Policy & Legal. Mr. Shaw comes to CFP Board with more than 13 years of experience as a legal practitioner, particularly in the areas of public policy formulation and execution. Mr. Shaw has held positions of progressive responsibility at NASD (now known as the Financial Industry Regulatory Authority or FINRA), which most recently culminated in his appointment as Senior Counsel in the Office of Regulatory Policy. While serving at NASD, Mr. Shaw’s responsibilities included providing high-level legal counsel on complex business matters and securities laws.

“Michael Shaw’s experience at NASD, combined with his legal and public policy experience, provides CFP Board with a strong public policy leader,” said Kevin R. Keller, CAE, Chief Executive Officer of CFP Board. “We are extremely pleased to have discovered the right combination of experience, leadership and intellect in Michael Shaw to help CFP Board at this critical juncture in our growth, particularly as we plan to take a more active seat at the table upon our transition to Washington, D.C.”

CFP Board’s upcoming move to the nation’s capital is expected to allow the organization to become a more vigorous advocate for the public’s interest and to facilitate a more influential voice in public policy debates during a time when more Americans than ever are in need of ethical financial planning options. In his new role, Mr. Shaw will develop plans for CFP Board’s public policy and legal activities and work to ensure the organization’s visibility and credibility with legislators and regulators. In addition, he will coordinate the professional review department’s work with CFP Board’s Disciplinary and Ethics Commission to ensure that CFP Board’s disciplinary process upholds the integrity of the CFP® certification, and work to protect the organization’s intellectual property.

“I feel honored to be joining the organization at this exciting period in its 22-year history,” said Mr. Shaw. “For years, CFP Board has performed tremendous work on behalf of the American public and the financial planning profession, and I am pleased to be joining a great team that will together help to shape the future.”

Mr. Shaw began his career as legal counsel at Monumental Life Insurance Company, a division of AEGON Insurance Group, and as staff attorney at the Department of Human Resources for the State of Maryland. Mr. Shaw holds a Bachelors degree in Economics from Marquette University and a law degree from the Catholic University of America in Washington D.C. He is licensed to practice law in the state of Maryland, holds a Series 7 securities license and is a chartered financial consultant (ChFC), Chartered Life Underwriter (CLU) and a Certified Regulatory Compliance Professional (CRCP).

Updates to Disciplinary Rules and Procedures, Effective July 1, 2008

CFP Board’s Board of Directors approved an updated version of CFP Board’s Disciplinary Rules and Procedures (Disciplinary Procedures). The revisions, which were proposed by CFP Board’s Disciplinary and Ethics Commission, update the language of the Disciplinary Procedures for consistency with the recently-adopted Standards of Professional Conduct that become effective on July 1, 2008. The revisions leave intact all of the existing procedures related to CFP Board’s disciplinary process.

Specific updates to the Disciplinary Procedures include the following:

1. References to the Code of Ethics and Professional Responsibility were replaced with references to Rules of Conduct or expanded to refer to both the Code of Ethics and Professional Responsibility and Rules of Conduct.
2. References to “CFP Board designees” were replaced with references to “certificants” and/or “registrants.”
3. References to specific staff positions, titles, and CFP Board office locations were re-stated more generally to reduce the likelihood that staff and organizational changes at CFP Board might require further updates to the Disciplinary Procedures.
4. A reference to the Candidate Fitness Standards approved by the Board of Directors in May 2006 was added to Article 4.5 (“Forms of Discipline Concerning Candidates”).

The updated Disciplinary Procedures become effective on July 1, 2008, along with the other revisions to CFP Board’s Standards of Professional Conduct. A redlined document showing the changes to the Disciplinary Procedures is available on CFP Board’s Web site at: www.CFP.net/downloads/2008DRP.pdf

Bachelor’s Degree Requirement Modified

At its August 2007 business meeting, CFP Board’s Board of Directors approved a modification to the bachelor’s degree requirement for initial CFP® certification, which became effective earlier this year. The modified requirement expands the range of institutions at which applicants for CFP® certification may obtain qualified bachelor’s degrees. CFP Board will now accept bachelor’s degrees from all colleges and universities accredited by an accreditation body recognized by the U.S. Department of Education.

As originally introduced, the bachelor’s degree requirement stated that an applicant for CFP® certification must hold a bachelor’s degree (or higher) from a regionally-accredited U.S. college or university.

The updated requirement, effective immediately, reads as follows:

A bachelor’s degree (or higher), or its equivalent,¹ in any discipline, from an accredited college or university,² is required to attain CFP® certification.
 
¹International degrees may be substituted for a U.S. undergraduate degree if they receive equivalency from a third-party evaluation agency, which is a member of National Association of Credential Evaluation Services (NACES) www.NACES.org. Applicants should request a document-by-document evaluation.
 
²An “accredited college or university” is one that has been accredited by an accreditation body recognized by the U.S. Department of Education. To confirm a school's accreditation, please visit the Department of Education's Web site (ope.ed.gov/accreditation/Search.asp).

The bachelor's degree requirement is a condition of initial certification; it is not a requirement to be eligible to take the CFP® Certification Examination. Applicants for CFP® certification must provide CFP Board with evidence that they hold a qualified bachelor's degree or higher degree before certification may be granted.

Questions about the bachelor’s degree requirement or other requirements for initial CFP® certification may be directed to initialcert@CFPBoard.org or 800-487-1497.

Report on July 2007 Disciplinary and Ethics Commission Meeting

The Disciplinary and Ethics Commission held disciplinary hearings on July 20 and 21, 2007 and considered 27 disciplinary cases. Public disciplinary actions will be announced after the decisions become final, following the expiration of the appeal period outlined in CFP Board’s Disciplinary Rules and Procedures.

At its business meeting, the Commission met Kevin R. Keller, CFP Board’s CEO and Michael P. Shaw, CFP Board’s Managing Director, Public Policy & Legal, who will be responsible for coordinating the professional review department’s work with the Commission. The Commission also proposed revisions to the Disciplinary Rules and Procedures that update certain terminology for consistency with the recently-adopted Standards of Professional Conduct that become effective on July 1, 2008. The revisions leave intact all of the existing procedures related to CFP Board’s disciplinary process. The proposed changes were presented to the Board of Directors at its meeting on August 3, 2007 and were approved with an effective date of July 1, 2008.

The Commission's meetings would not be possible without the help of CFP® certificants willing to contribute their time and expertise to support CFP Board’s disciplinary process. The July 2007 meeting benefited from the assistance of Dallas Coffman, CFP®, CLU, ChFC, EA of Wakefield, Mass.; Steven Earley, CFP® of Newport Beach, Calif.; Philip Fazio, CFP®, MBA of Ft. Lauderdale, Fla.; and Barbara A. Healy, CFP®, ChFC, CFS of Scottsdale, Ariz. CFP Board is grateful to these volunteers and the dedicated Disciplinary and Ethics Commission members who serve to protect the public by helping to enforce CFP Board's ethical standards.

CFP Board Awards $465,063 in Grant Funding to Eight Projects Across the U.S.

CFP Board has made grant awards totaling $456,063 to eight projects that are developing innovative and sustainable methods of delivering the benefits of financial planning to communities not traditionally served by the financial planning profession. The grant awards further CFP Board's mission to help Americans benefit from competent and ethical financial planning by giving financial support to projects that provide underserved populations with financial planning services and information.

The grant award recipients are:

• California Institute of Finance at California Lutheran University (Thousand Oaks, Calif.)
• The Curators of the University of Missouri (Columbia, Mo.)
• Economic Awareness Council (Hinsdale, Ill.)
• Hope Pastoral Care & Counseling (San Clemente, Calif.)
• Mind’s Eye Resource Management (Denver, Colo.)
• Sage Financial Solutions (Pinole, Calif.)
• Skills for Living (Houston, Texas)
• The University of Central Arkansas (Conway, Ark.)

“CFP Board values public education as part of our goal of advancing understanding of the value of financial planning,” said Karen P. Schaeffer, CFP®, Chair of CFP Board's Board of Directors. “These organizations and their programs are excellent tools to help us reach that goal.”

The grant awards were made through CFP Board's Financial Planning Grants program, which has provided grants totaling $1,331,630 to 28 projects across the U.S. Through the grant program, CFP Board has provided financial support to non-profit organizations, educators and CFP® professionals involved in a wide variety of activities, ranging from innovative uses of technology that expand public access to financial planning to creative partnerships delivering financial planning information and assistance through libraries, high schools, colleges and community-based organizations.

Additional information about CFP Board's grant program and the 2007 grant recipients is available at www.CFP.net/grants.

2007 Financial Planning Clinic Connects Hundreds with CFP® Professionals

CFP Board’s Financial Planning Clinic at the Sheraton Boston Hotel was a success for the hundreds of consumers who took the opportunity to consult with volunteer CERTIFIED FINANCIAL PLANNER™ professionals about their personal finance questions and concerns. Without exception, the attendees expressed satisfaction with the information they received, and many also took time to attend the three educational workshops made available during the event. CFP Board was honored to have Scott Campbell, Deputy Treasurer and Director of Operations for the Commonwealth of Massachusetts welcome the CFP® professionals who made the Clinic possible, and CFP Board shares his appreciation for the generosity of the CFP® professionals who helped raise public awareness of the benefits of financial planning and contributed to the success of the 2007 Financial Planning Clinic.

2007 Program Directors Conference: August 10, 2007 Registration Deadline

The 2007 Program Directors Conference will be here in just a few weeks, and registration ends on August 10. This conference for directors of educational programs registered with CFP Board 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.

Employment Opportunities at CFP Board’s Washington Headquarters

CFP Board has filled the position of Managing Director, Public Policy & Legal, but opportunities to join many key positions at CFP Board’s Washington, D.C. headquarters still remain, including Managing Director, Examinations and Education, Director of Examinations, Director of Education, Director of Professional Review and Director of Policy. If you understand the value of financial planning and have the talent and energy to help shape the ongoing development of CFP Board’s mission, we invite you learn more about available employment opportunities at www.CFP.net/aboutus/jobs.asp.