Are certified financial planner professionals ready for prime-time political office? You bet we are! Financial planning is at an interesting (maybe even critical) crossroads in terms of our evolution as an accepted "profession." Wikipedia defines a profession as “a vocation founded upon specialized educational training, the purpose of which is to supply objective counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain.”
So far, so good.
Interestingly, the definition goes on to say: “Originally, any regulation of the professions was self-regulation through bodies such as the College of Physicians or the Inns of Court. With the growing role of government, statutory bodies have increasingly taken on this role, their members being appointed either by the profession or (increasingly) by government. Proposals for the introduction or enhancement of statutory regulation may be welcomed by a profession as protecting clients and enhancing its quality and reputation, or as restricting access to the profession and hence enabling higher fees to be charged; or else may be resisted as limiting the members' freedom to innovate or to practice in their professional judgment they consider best.”
We all know that our profession is, in fact, regulated by the individual disciplines involved (securities, insurance, investment advisory, accounting, law), but the practice of financial planning isn't — at least as we as a society have come to think of it. Moreover, many legislators joke that your hairdresser must be licensed to work in most states, but not the person responsible for helping you retire comfortably. Hmmm ... how long do you think that will last?
I wrote an op-ed piece for InvestmentNews in September 2012 about the need for certified financial planner professionals to rise up and run for office. Part of my reasoning was that there were too few CFP practitioners in state and federal government, and one of the results was poor policy decisions that led to our country's financial meltdown in 2008. Of course, that's an over-simplification as many factors were at work, but the simple truth is that financial literacy is lacking at a legislative level, and financial planners could help remedy that.
But there was another reason that I felt strongly that our tribe needs to be in the middle of all this — the inevitable regulation that will eventually be forced upon us. I would feel far better if some of us were at the collective tables helping to formulate these rules/regulations/laws than having them dictated by folks that do not necessarily have our best interests in mind. Consumers would benefit from the more learned, more experienced vantage point that CFP professionals would bring when crafting such legislation, and our profession would gain from our ability to prevent the passage of ill-advised and unnecessarily cumbersome rules that might look good politically, but in fact do more harm than good.
(For more on this issue, see InvestmentNews'Feb. 24 cover story.)
Registered investment adviser-only financial planning practitioners have the current advantage of avoiding the additional burdens and concerns of those who work through broker-dealers. B-Ds are understandably worried that a politically active representative might inadvertently cross a Financial Industry Regulatory Authority Inc. regulatory line and place both the representative and/or the firm in jeopardy. While state and Securities and Exchange Commission-regulated RIAs must also observe strict standards, practical issues like advertising and speeches would not have to be approved by a compliance department every time the candidate operates a campaign or, when actually in office, giving an interview. As the lines blur between regulatory bodies and there is more consistency in the approaches, I think this matter will be less and less a factor. But it's front and center now, and most B-Ds are not excited to approve political office as an accepted "outside business activity."
Finally, it's been said to me that only financially independent financial planners should run for office. Besides the obvious time away from clients, the more quiet but starkly realistic worry is that once you telegraph your political beliefs, you risk alienating half of your clientele, assuming your practice is equally divided between liberals and conservatives. Oh sure, you can play the middle-of-the-road card for a while and claim to be a moderate Republican or conservative Democrat — in fact, until the family of Ron Paul came along, it was even fashionable to claim to be a Libertarian — but the sad truth is that you could lose a lot of assets under management fast. Of course, the opposite is true, too: If you live in an area that enjoys a political climate in which you fit, you could benefit mightily from the publicity of the race. I have always counseled potential CFP professionals considering a race that if they run an upstanding, honorable campaign with integrity, they win even if they lose. I mean, what price would any of us pay to have free interviews, regular pictures in the newspaper, and even radio and television appearances, usually in the form of debates? It's a public relations bonanza if done properly, but, as I said earlier, the opposite is true, too: It could be the death of your practice if handled poorly.
Here are a few points to remember if you consider running for public office:
1. Be prepared to be totally transparent; there should be nothing in your closet other than clothing. Tax returns will be examined.
2. Be prepared to discuss your income and your lifestyle. If you make a lot of money and are ashamed about it, don't run.
3. Be prepared to compromise. Financial planners have strong beliefs, but sometimes you cannot have it your way — at least all at once.
4. Be prepared to rehearse and practice your message. Your opponent will usually be a pro, and will feast on an amateur.
5. Be prepared to lose. There is no shame in it, particularly if the loss is handled graciously. Voters respect grace and courage.
6. Be prepared to try again. The unwritten rule is that if you handled a loss properly, you win the sympathy vote the next time.
7. Be overly humble if you win. Extend a hand to your opponent. Consider hiring some of her or his campaign staff for your new office.
Make it a little harder for them to want to run against you at re-election time. This concept applies regardless of your opponent's demeanor during the campaign, and is even more valuable if it was acrimonious.
I am gratified to know that more and more of our colleagues are running — or thinking about running — for elected office. We have watched trial lawyers, chiropractors, insurance agents and others create and safeguard their professions from forces opposed to them by doing so. It's time we borrowed a page from their collective play books and do the same for financial planning.
Paul H. Auslander, a certified financial planner, is former president of the Financial Planning Association and the 2014 president of FPA of Florida.
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