After months of sounding out its certificants, the CFP Board's executive leadership this week will propose to the group's board that fees be increased by $12 a month, beginning July 1, for the 62,000 holders of the mark.
The Certified Financial Planner Board of Standards Inc. plans to use 100% of the extra fee money to fund an annual $9 million consumer advertising campaign aimed at promoting the profession and highlighting the CFP designation.
We applaud the CFP Board for taking a leadership role in recognizing the need for a public-awareness campaign that upholds CFP certification as the gold standard for personal financial planning.
As part of the effort, the leadership also will ask the board to deduct $6 million from the organization's $23.5 million reserve fund and use that seed money to jump-start the campaign in 2011.
In making that request, the CFP Board's executives will promise to step back and assess the effectiveness of the campaign in two years, and if they determine that the campaign is falling short of its goal, they will end the fee hike.
The campaign would target a group of 20.2 million mass-affluent investors, a segment that most financial planners are eager to reach — and need to educate.
We hope and expect that the CFP Board's directors will see the wisdom in launching such an important campaign.
Although there will always be naysayers, we hope that mark holders also will recognize the wisdom of such a campaign and temper their propensity to whine about a fee hike.
For those planners constitutionally incapable of stoicism, we suggest applying the “latte factor”: Eliminate one fancy coffee drink a week, and you will be able to afford the $144 annual fee hike.
Our main worry about the increase, however, is that it may not be enough. Although a $9 million annual advertising budget is a lot for an organization that traditionally has relied on word-of-mouth to put forth its message, the sum is a proverbial drop in the bucket, compared with what corporations and other groups spend on advertising.
To be sure, the CFP Board faces an uphill battle in gaining the trust and confidence of consumers. Following the financial crisis and scandals involving such investment advisers as Bernard Madoff, investors remain suspicious of givers of financial guidance, particularly with the jumble of acronyms on the business cards of people who dole out financial advice — whether or not the marks signify much.
In fact, had the CFP Board been more proactive in upholding CFP certification as the recognized standard of excellence for personal financial planning a decade ago, there might have been far fewer professional designations for financial advisers.
That would mean that advisers — and more importantly, their clients — might not have found themselves in the position now of having to wade through a puzzling morass of planner credentials — some of which can be “earned” for the price of two dozen fancy coffees.
Still, we commend the CFP Board's executive leadership for taking on the difficult task it faces.
The organization hired the firm Arnold Worldwide to help it think through a strategy.
The advertising company is known for creating a campaign for Fidelity Investments that features the “green line” motif and one for Progressive Casualty Insurance Co. that features the effervescent saleswoman Flo.
The CFP Board also conducted a comprehensive feasibility study to determine the merits of a public-awareness campaign. As part of its research, the CFP Board talked with Americans about their impressions of financial planners and specifically what makes a CFP professional different.
It is our hope that increased awareness of the integrity of CFP certification will further legitimize the advice business. We also hope that it will serve as a catalyst for more advisers to obtain that certification and to put into practice the code of ethics and financial planning practice standards that come with being a CFP.
Isn't that worth forgoing one caramel mocha frappuccino each week?