Why practice management should be a continuing-education requirement

Several recent industry studies have found that advisers spend anywhere from 50% to 70% of their time actively managing and attempting to grow their practices, leaving precious little time to actually work with clients.
Further, with a more complex operating environment, volatile markets, increasing costs and a more fearsome regulatory situation, many advisers are reporting declining profitability and an uncertain outlook for long-term viability.
So why is it then that the CFP Board of Standards continues to resist the industry movement for allowing continuing education credits for practice management content?
According to the board’s official documents on policies, renewal requirements and continuing education standards, “CE credit is not accepted in the following situations in which the subject content pertains to public accounting, computer hardware and software, marketing, practice management, sales, specific company or product presentations, or any other topic not included in CFP Board’s list of accepted topics.”
While some of these topics clearly don’t make sense for CE, technology and practice management most certainly do. Otherwise, what good is having an advanced certification that allows a practitioner to deliver financial planning advice if the vehicle in which it is delivered is inefficient on a good day and not sustainable on a bad?
Historically, the financial planning business model has focused on providing a high level of personal service in developing financial plans and helping investors meet their goals, in exchange for an asset management fee. This was all well and good during the bull markets of the 90’s and the 00’s (the period in which the bulk of the increase in CFP certificants occurred). As a result of the “hidden subsidy” provided by booming markets, advisers lacked discipline in building efficient businesses, relying on manual processes and an underinvestment in technology. However, in today’s more challenging times, this approach is no longer sustainable.
Advisers need to learn about the latest technologies, business processes and practice management methods in order to streamline their practices and build a scalable infrastructure for growth.
Advisers should be encouraged and incentivized to seek out this knowledge so they can better serve more investors, grow their practices and enable the next generation of advisers to join them and expand the profession.
However, take a look at any industry conference that is running concurrent sessions, one with CE credits and one without. While the indexed annuity session that qualifies for CE credit is standing room only, the technology session on how CRM systems and document management software can create valuable capacity to better serve clients is virtually empty. When asked about this dichotomy, advisers always say that since their time is extremely limited “when it comes to professional development, if it doesn’t qualify for CE, then I won’t attend.”

Timothy Welsh, a certified financial planner, is president and founder of Nexus Strategy, LLC, a consulting firm to the wealth management industry. The full version of this piece will appear in the February 27, 2012 print issue of InvestmentNews.