CFPs face fee hike — and are loving it

Generally speaking, financial advisers aren't exactly overjoyed when one of their industry associations raises its dues

Generally speaking, financial advisers aren’t exactly overjoyed when one of their industry associations raises its dues.

Such standards-setting bodies often catch plenty of flak from the folks they oversee. But the recent announcement of a fee hike by the Certified Financial Planner Board of Standards Inc. has — surprisingly — drawn a good deal of support from financial planners.

The CFP Board’s executive leadership next month will propose to the organization’s board that fees be increased by $12 a month, beginning July 1, for the 62,000 CFP mark holders. Currently, renewal of the designation costs $360 every two years, or about $15 a month.

The extra $12 would mean an 80% hike. If the change in fees takes effect, CFP designates still will have to be recertified every two years, but they will be billed annually.

The CFP Board plans to use the extra money to help fund a multimillion-dollar marketing campaign aimed at promoting the profession and highlighting the CFP designation. The campaign would target a group of 20 million mass-affluent investors.

That is a segment financial planners are keen to reach — and educate.

“I think it’s a great idea,” said Mike McGervey, president of McGervey Wealth Management.

“There does appear to be a tremendous amount of consumer confusion in the industry,” he said. “An effective campaign may help CFP certificants further differentiate themselves and their firms from this sea of sameness.”

Mr. McGervey noted that some of the other adviser designations can be earned over a weekend, as opposed to the course work and two-day exam required for a CFP mark.

“In the big scheme of things, the price is almost irrelevant in terms of the dollar amount,” he said. “Most players in the business today spend much, much more than that in their business development efforts.”

An online survey of CFPs conducted by the board revealed that 94% support a public-awareness campaign, while a phone survey found that 83% back an increase in fees to fund it.

Making the CFP mark a brand name is the top priority for planners, according to Kevin Keller, the CFP Board’s chief executive.

“It’s the No. 1 issue that certificants identify that they’d like from the CFP Board,” he said.

That is understandable. 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 they are qualified.

BUILDING A BRAND

“It is time now to tell the story of the value and rigor of the CFP certificate,” said Robert Glovsky, chairman of the CFP Board and president of Mintz Levin Financial Advisors.

“Over time, consumers will have a preference for the CFP certificate and ask for it,” he said. “We have to start with raising public awareness.”

The campaign will be designed to reach Americans between 35 and 64 with investible assets ranging from $100,000 to $1 million — a segment that represents the sweet spot for the financial planning industry.

“They still see themselves as middle class,” Mr. Keller said.

“They’ve worked hard for what they have,” he said. “These people are most likely interested in learning about CFP certificants.”

The kickoff will begin late next winter or early spring. The initial phase, prior to the fee increase kicking in, will be funded by $6 million drawn from the CFP Board’s reserve fund of $23.5 million.

Even financial planners who support the campaign emphasize that maintaining the backing of the CFP community requires that the board continue to make a strong case.

“It will have a lot to do with the CFP Board designing a logical and well-thought-through campaign,” said Lynn Ballou, managing partner at Ballou Plum Wealth Advisors LLC.

A potential selling point for CFP mark holders is the potential new business that could be generated from the marketing effort. At a recent meeting of the East Bay (Calif.) chapter of the Financial Planning Association, Ms. Ballou was introduced as a newly appointed CFP ambassador, a position created by the board to increase public outreach.

She said that many of the 70 or so CFPs at the breakfast session in Alamo, Calif., stared off in the distance as she described the campaign — until she mentioned that it could increase business.

“Everybody sat up,” Ms. Ballou said.

“They actually looked at me,” she said. “They got excited about the idea.”

But Ms. Ballou acknowledges that a tangible impact could take a long time. After all, the medical, law and accounting professions built their reputations over centuries.

“It’s multigenerational,” Ms. Ballou said.

A few CFPs remain skeptical about the plan.

“I’m kind of doubtful that it’s worth it,” said David Kuenzi, founder of Thun Financial Advisers LLC. “I would be much more inclined to spend the money on publishing more research for the client, rather than a marketing campaign for the CFP.”

But Mr. Kuenzi added: “My mind is open. I haven’t seen the case.”

The CFP Board has turned to Arnold Worldwide to come up with “the case.” The campaign will involve television and many other forms of media, according to Mr. Keller.

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 stars the effervescent, and borderline annoying, Flo.

It isn’t yet clear whether there will be a CFP equivalent of Flo appearing on the airwaves.

“We’re still noodling through the media plan,” Mr. Keller said.

E-mail Mark Schoeff Jr. at [email protected].