FPA nudged CFP Board to drop its automatic $25 donation

Although the board relented, it does have a $10 million fundraising goal for its new Center for Financial Planning

May 26, 2016 @ 1:50 pm

By Mark Schoeff Jr.

The Certified Financial Planner Board of Standards Inc. is passionate about its new Center for Financial Planning, which it says is addressing issues that will determine the future of the profession.

Now it's trying to figure out how to fund the initiative. It recently backed away from one idea — an automatic $25 increase to the annual certificate fee — after resistance from CFPs and a nudge from the Financial Planning Association.

CFP certificants were defaulted into the additional $25 charge, which was added during their renewal process. The CFP Board said it in fact ran three tests — two opt-outs and one opt-in — on a group of CFPs that represented less than 8% of the more than 74,000 certificants.

“There was an opt-out that raised some issues,” said Marilyn Mohrman-Gillis, executive director of the center. “With that feedback, we're making a quick decision to discontinue the test.”

The backlash from CFPs who didn't understand that they were making a contribution to the center in part surfaced from some FPA members. The organization recently sent a letter to the CFP Board saying that some CFPs overlooked or didn't understand the opt-out process.

“We let them know they needed to be a little more transparent in the way they were presenting it,” said FPA President Pamela Sandy.

A warning shot also was fired by Michael Kitces, a CFP and publisher of the Nerd's Eye View blog. In a May 23 post, he wrote that he was hearing from many CFPs upset about making what they believed were involuntary contributions to the center.

“I'm glad they backed off,” said Mr. Kitces, partner and director of research at Pinnacle Advisory Group. “What could they possibly be testing besides wanting to see if people object?”

Ms. Mohrman-Gillis said the CFP Board had not made any decision on how to proceed with fundraising when the controversy blew up.

“It is a standard practice to do these type of tests,” she said. “They provided us with the information to decide that the best way to move forward is an approach for CFP professionals to make a voluntary and intentional contribution to the center.”

The CFP Board should have explained what it was doing before it began the tests, Mr. Kitces asserts.

“This continues to make the point that the board of directors is not a sufficient accountability mechanism; otherwise, we wouldn't keep having issues like these every few years,” Mr. Kitces said.

He also asserts that the CFP Board, through its center, is encroaching on FPA turf, an organization of about 24,000 members, 17,000 of whom hold CFP designations.

The Center for Financial Planning focuses on increasing the number of financial planners, making the profession more diverse and conducting research. The FPA also has programs in those areas.

“It's not part of their core mission,” Mr. Kitces said of the CFP Board. “It's a frightening amount of mission creep.”

Ms. Mohrman-Gillis disagrees.

“The center is squarely within the mission of the CFP Board,” she said. “These problems are larger than one firm or organization can tackle. We feel passionately that these issues need to be addressed.”

The FPA doesn't believe the CFP Board is crowding it out, according to Ms. Sandy. The CFP Board sets and enforces educational and ethical standards related to the CFP mark, while FPA is a membership organization.

“They've made it clear that they mint financial planners, FPA nurtures them,” said Ms. Sandy, founder and chief executive of Confiance. “We help them build their businesses and meet their goals.”

She said the CFP Board and FPA work well together.

“That doesn't mean we don't disagree about things sometimes,” Ms. Sandy said. “In the end, we have the same goals in mind. Our members expect us to have a good relationship with the certifying body.”

Ms. Mohrman-Gillis said the Center for Financial Planning has the support of CFP mark holders.

“Financial planners are very responsive to the fundamental mission and vision of the center,” she said.

And she wants to get them involved through financial support. The initial fundraising goal for the center is $10 million, which will be generated through corporate and individual gifts.

TD Ameritrade Institutional has made a multimillion-dollar contribution over five years, although Ms. Mohrman-Gillis declined to specify the amount.

“We're going to cast a very wide net,” she said.

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