FPA backs away from controversial plan to merge chapters

The group is no longer seeking to dissolve local chapters as separate legal entities

Apr 16, 2019 @ 12:01 pm

By Greg Iacurci

The Financial Planning Association is backing away from a controversial proposal to change the structure of its local chapters nationwide, after facing heat from members who felt the shift amounted to a power grab.

The trade group for financial planners, which has 23,000 members, last year proposed to overhaul its organizational structure in a sweeping plan called the OneFPA Network. As part of that plan, the F PA proposed merging its 86 local chapters — which are separately incorporated, nonprofit entities — into one national unit.

The proposal, a bid to centralize chapter functions like technology, accounting and finance, would have dissolved the local entities and merged them with the national FPA entity.

Now, the FPA is side-lining the idea after receiving blowback from members during a listening tour that began in November. Some members were especially concerned that local chapters would lose the autonomy to raise and spend money as they saw fit.

"We were going to jump right in, but we're tapping the brakes on that," said Evelyn Zohlen, the FPA's president. "The feedback we received was that going all-in on that felt really scary."

(More: FPA tries to move on from messy divorce with New York chapter)

Instead, the FPA will beta-test the idea of centralizing certain functions with up to 10 local chapters in order to assess the strategy's impact, according to an updated OneFPA Network proposal released April 16.

The chapters, which would apply to be part of a two-year test phase that begins January 2020, won't need to dissolve their legal entities or relinquish control of their finances. Instead, they would be sharing financial information with the national FPA through systematized reporting. Shared technology will be implemented as it's designed and becomes ready for testing, officials said.

The FPA may revisit the idea of dissolving local-chapter entities based on the outcome of the beta test, officials added. An independent consulting firm will assess the results of the beta test.

Paul Auslander, director of financial planning at ProVise Management Group, said it isn't surprising some people pushed back against the FPA's initial idea to dissolve the chapters, because the semi-autonomous nature of the chapters has been entrenched in the group's culture since its in inception in 2000. Mr. Auslander said the changes to the group's initial proposal shows the FPA is "being responsive to its members.

"During the first go around there were understandable heated conversations going back and forth when people saw something and didn't like it," said Mr. Auslander, who was president of the FPA in 2012. "But you have to start somewhere."

The FPA felt an overhaul of its organizational structure was necessary to combat the unsustainable and ineffective way the trade group had been operating. Lauren Schadle, the group's executive director, said the FPA's challenges are similar to others faced by voluntary membership organizations — increased competition, changing demographics and evolving business models, for example.

As the FPA is stepping back from some parts of its proposal, it plans to move forward with others. It would, for example, create the OneFPA Council, composed of a representative from each local chapter and three members of the NexGen Executive Committee. The council is meant to promote greater democracy within the national FPA by giving members a say in the group's strategic direction.

A 45-day comment period begins today on the updated OneFPA Network proposal, running through May 30. The final OneFPA Network plan will be unveiled July 11.

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