The membership of the Financial Planning Association has been declining for several years. After a peak of over 28,400 members in late 2002, the organization was largely flat for many years, still hailing at 27,805 members by the end of 2007. But the membership tumbled almost 15% from the end of 2007 through the end of 2009, and it is been largely flat at a base of approximately 23,600 members since then. The FPA has suggested that its declining membership count is a result of its strong and passionate advocacy positions - in particular, its high Standard of Care and its positions on fiduciary financial planning - which have perhaps alienated some current/former/prospective members, but defends its positions (and their membership-limiting consequences) as being a necessary result of its mission to advance the financial planning profession. Yet the question arises - if high standards of care and fiduciary financial planning are really at the heart of FPA's membership problem, then why is FPA membership declining even while the number of CFP certificants who are already committed to a comparable standard of care and fiduciary duty continues to rise!?
The inspiration for today's blog post is a recent article by Bob Veres for Financial Planning magazine entitled "The FPA's Dilemma" that discusses some of the recent membership challenges of the Financial Planning Association. What's notable about the article is that, unlike some other recent criticism of the FPA (for instance, Andy Gluck's article in Financial Advisor magazine earlier this year) which focused on its fiduciary positions, the SEC lawsuit, and the split with the broker-dealer community and the Financial Services Institute as reasons for declining membership, Veres suggests that the problems with FPA membership relate to challenges with staff and leadership, the idea that people "send the FPA their dues and get little or nothing in returns", and the FPA's relationship with its sponsors and product vendors. In other words, Veres is suggesting that the membership problem is NOT simply FPA's fiduciary advocacy stance and its high standard of care excluding people.
And there appears to be some credibility for that notion. Earlier this week, I discussed how financial planning seems to slowly be winning the fiduciary war from the inside out, as the percentage of financial advisors that are CFP certificants - and therefore people who are taught a fiduciary process and commit themselves to the CFP Board's fiduciary obligation in the Standards of Professional Conduct when providing material elements of financial planning - is rising, and may at some point reach a critical mass level where the majority of the industry already practices as a fiduciary, and therefore fiduciary regulation may become a fait accompli.
But what's notable is that while the number of CFP certificants has grown steadily for the past decade, and the percentage of financial advisors that are CFP certificants has risen, the percentage of CFP certificants that are FPA members appears to actually be declining! In other words, even though the number of CFP certificants is rising, FPA is not attracting and retaining their fair share of those prospective members - all of whom would already easily meet the FPA's Standard of Care and fiduciary focus, simply by virtue of already adhering to the CFP Board's Standards of Professional Conduct, if that was the only issue!
The graph below shows the membership count of the FPA for the past decade, along with the number of active CFP certificants. As the results reveal, the headcount for FPA membership was flat for most of the decade, and declined more recently, while the number of CFP certificants has steadily risen every year. Arguably, if the only (or primary) barrier to FPA membership was its standard of care and fiduciary position, it would be a non-issue to at least this subset of financial advisors, who already adhere to a comparable fiduciary oath and standard of care. Yet while the number of CFP certificants has risen by over 23,000 in the past decade, the FPA's membership has declined by over 4,000? Why couldn't the FPA capture all or at least SOME of the dramatic cumulative rise in CFP certificants?
To me, this suggests that Veres may be right about at least some of the concerns he raises. Personally, having attended the FPA Experience conference myself (which Veres rails against as being very vendor-tilted), I found the exhibit hall to be much more rounded out with a range of relevant product and service providers for financial planners that what Veres suggests. In point of fact, I have long suggested that the opportunity to see the FPA Experience exhibit hall - the greatest gathering anyplace in the country (in the world!?) of product and service providers focused on financial planning - is actually one of the PRIMARY reasons TO attend the conference, even more so than the content! Personally, I'd like to see the exhibit hall of the conference expanded further, to truly make FPA Experience the "big show" in financial planning.
Nonetheless, Veres has some valid points about other areas of concern for the FPA, from its occasional difficulties in driving discussion on its website forums, to some of the criticisms on its research, to the challenging reality that most of what FPA members receive for their dues is at best intangible and sometimes ephemeral. And although Veres doesn't note it, I know I've personally heard a lot of feedback that a major challenge of FPA is the inconsistency of the chapter experience - a difficulty I've witnessed personally as I travel to speak to many FPA chapters across the country every year.
Of course, the reality is that every organization faces challenges these days, and it would be unrealistic to expect the FPA (or anyone else) to be perfect. And similarly, we may not all agree about exactly what the primary problems are at the FPA. But I think the Veres article deserves some real acknowledgement for its emphasis that the problems with FPA's membership may NOT merely be the result of its fiduciary advocacy and standards of care. In fact, it arguably might not even be much of a differentiator at all anymore - although it was still the closing line in the FPA leadership's recent article in defense of its current direction - in a world where an increasing majority of those who really do believe in financial planning have already obtained the CFP marks, thereby making FPA's standard of care redundant at best. Perhaps the FPA should drop its own standard of care entirely, and simply embrace "having CFP certification" AS its standard of care, given that the CFP marks are clearly emerging as the dominant benchmark designation of the profession, and merely capturing 2/3rds of all CFP certificants as FPA membership would nearly double their membership!
In any event, though, at least amongst the now-over-63,000 CFP certificants who already do adhere to the CFP Board's standard of care, the question remains why more are not attracted to FPA membership? For that group it least, it seems unrealistic to suggest it's because of the FPA's Standard of Care. Which implies that perhaps the greatest challenges for FPA membership are not because of its fiduciary views... but instead is in spite of them?
So what do you think? Are you an FPA member? Why or why not? Do you think the FPA's standard of care and fiduciary advocacy is a turn-on, a turn-off, or merely duplicative in a world with the CFP Board and its marks? What do you think the FPA's unique value is in the competitive landscape? What should it be?