Financial planning shows explosive international growth

The growth of the financial planning profession overseas is in the fast lane, though there are some speed bumps, observers say.
MAR 19, 2007
NEW YORK — The growth of the financial planning profession overseas is in the fast lane, though there are some speed bumps, observers say. For example, the International Association of Registered Financial Consultants of Middletown, Ohio, which recently opened offices in Australia, India and Thailand, has doubled its overseas membership to 4,000 over the past two years, according to its chairman, Ed Morrow. He said he expects that number to double again by 2008. In addition, the Denver-based Financial Planning Standards Board Ltd., which grants the certified financial planner designation outside the United States, recently launched a certification program in Indonesia, the world’s most populous Muslim nation. There are now more than 105,000 CFPs in 20 countries, a 75% increase from the number in 2001, according to the board. Meanwhile, the Greenwood Village, Colo.-based Investment Management Consultants Association will register its trademark in China this year. And the Financial Planning Association in Denver is about to launch Financial Planning Connections, a newsletter with content from the Journal of Financial Planning which will be read by an estimated 40,000 planners in eight countries. Private-sector companies are expanding overseas, as well. For instance, Financial DNA Resources, an Atlanta-based company that trains and coaches financial planners, opened offices in Hong Kong and the Netherlands last year. The firm plans to open offices in Belgium, India, Ireland and Singapore this year. “The growth prospects overseas are huge,” said Hugh Massie, president and chief executive of Financial DNA. “More and more wealth is being created, not only at the upper end but among the middle class, and this is opening up the market for financial planning and advisory services.” Financial planning professionals also cite aging populations around the world and the fact that people increasingly are concerned about retirement as other catalysts for the increased global interest in financial planning. “Baby boomers are a worldwide phenomenon,” said Deena Katz, president of Evensky & Katz Wealth Management in Coral Gables, Fla., who is writing a column for an Indian magazine and is scheduled to speak in Singapore later this year. Asia “is by far the hot spot for growth. Asians are keen on saving, and they’re sitting on a demographic time bomb,” said Laura Brook, director of international relations for the FPA. Mr. Morrow, who will discuss financial planning this summer at the International Dragon Conference in Xiamen, China, and whose organization plans to open offices in Korea and Vietnam this year, agrees. “The Asian population is growing, and the economies are bursting at the seams,” he said. International demand for financial planning is also being reflected in academia, said Ms. Katz, who is also an associate professor in the personal-planning division at Texas Tech University in Lubbock. The school is sending students to internships in Australia, and it plans to send a faculty member to spend a semester this year teaching financial planning at a university in Korea, she said. But the rapid growth of financial planning around the world isn’t always smooth sailing, planners say. Mr. Massie said he has resisted expanding his business into China, because the language proved to be “a much greater barrier” than expected. To date, he has concentrated on English-speaking countries. Muslim countries represent “special challenges,” Mr. Morrow said, because of Shariah, or Islamic law, which strictly regulates finance and investing, including restrictions on the use of interest, and prohibitions against investing in companies with ties to alcohol, tobacco and certain foods. In addition, because financial planning is so new in so many countries, the term is often used as a “buzzword used to sell products, which sullies the designation,” Ms. Brook said. “They’re using the gloss of advice to make the sale go down easier.” Consumer “lack of awareness” about financial planning, and abuse of the term, are problematic, agrees Financial Planning Standards Board chief executive Noel Maye, especially in emerging markets that are characterized by “product-selling environments.” Explosive international growth has also resulted in turf fights. While Mr. Morrow praised the CFP certification, he said that most CFP holders abroad tend to be “investment portfolio specialists” who cater to the wealthy and very wealthy segments of the population. By contrast, he said, planners with RFP designations overseas are more likely to target the more populous middle- and upper-middle-class demographics. But the Certified Financial Planner Board of Standards Inc. in Denver and FPSB affiliates don’t mandate where CFP holders work or practice, Mr. Maye argued. “Consequently, you will find CFP professionals employed in a variety of situations … representing a broad spectrum of socioeconomic groups,” he said.

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