A profession is built upon the principles of ethics, education, experience and a competency assessment ensuring that someone has the knowledge and skills to work with the public. Professionals who serve the public are also typically held accountable by a governmental body.
While brokers, investment advisers and insurance agents are regulated, financial planners per se are not. In this case, the Certified Financial Planner Board of Standards Inc. fills a gap where government regulation doesn't exist. We are not a regulator nor are we trying to be one. However, we are a professional standards-setting body with a well-recognized certification that serves as the cornerstone of a growing and thriving profession.
With this in mind, the directors of CFP Board have contemplated whether additional regulation in the states would be helpful to the public and whether additional state regulation would help establish financial planning as a recognized profession. After a long and thoughtful discussion, our board recently adopted a resolution that states "CFP Board will not support legislation that would create state regulation of financial planners," and that we "will affirmatively oppose any such legislation."
Some may wonder why we are taking such a firm stance, especially when some of our CFP professionals have been active in trying to get state regulation adopted. The answers are simple: The public can be better served in other ways; it's too costly; most CFP professionals are not asking for it; and there are better ways to build financial planning as a profession.
Let's start with why our stance is in the public's interest. CFP Board and our partners unsuccessfully advocated for the regulation of financial planners at the federal level during the consideration of Dodd-Frank, at a time when there was public fervor for regulation. If the opportunity presented itself again, we would jump right back in the fight. But it's in the interest of the public that we focus our time, talents and treasure in other ways that advance the financial planning profession so that more Americans have access to ethical and competent financial planners.
Next up, cost. Mounting a state-by-state campaign to regulate financial planners would cost millions and millions of dollars and thousands of hours of time. Opposition would be fierce, the battle would be long, and the fight could wind up reducing public access to financial planners. According to our own analysis, the money spent at the state level could be better invested somewhere else.
CFP professionals are not asking for it. A 2017 survey of CFP professionals conducted by Fondulas Strategic Research found that only 13% of CFP professionals support state regulation of financial planners. This is reflective of their desire to serve the public through their CFP certification, knowing that CFP Board has a consistent program to enforce our competency and ethics standards. Given the lack of support for state regulation, there are other ways to benefit the public and elevate the profession.
There is now a better way to build the financial planning profession. I'm proud to say that CFP Board is doing its part. There are more than 82,000 CFP professionals in the United States, which accounts for one in four financial advisers. The number of CFP professionals continues to rise, having increased more than 50% in the last decade. We also have spent more than $75 million over the last six years in support of a public awareness campaign that goes directly to consumers, telling them about the value of a CFP professional and how financial planning can help them. Our Center for Financial Planning is advancing the profession through programs that will help increase the diversity and sustainability of the profession while building an academic home for educators who teach the next generation of financial planners.
And most importantly, effective Oct. 1, 2019, CFP professionals will be held to a fiduciary standard when providing financial advice to a client — at all times.
Our role in financial services is clear: As a not-for-profit organization, the mission of CFP Board is to benefit the public by granting and upholding the CFP certification as the recognized standard in financial planning. As part of this mission, we will continue to ensure those standards remain relevant, credible and legally defensible — without the government directing us — so that we can better protect the public and help fuel the evolution of the financial planning profession.
Richard Salmen is chairman of the board of directors of the Certified Financial Planner Board of Standards Inc.