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Should Practice Management Really Be Eligible For CE?

Posted by Michael Kitces on Wednesday, September 5th, 11:09 am, 2012 in Planning Profession

With the first major changes to the continuing education requirements for CFP professionals in nearly two decades, the CFP Board has proposed that in the future up to 10% of the CE requirement could be satisfied with content on practice management. Distinct from education on trust and communication, the proposal would allow for CFP CE for practice management topics tied to the business of operating a financial planning practice. While many have long requested CE credit for practice management content, though, it seems that allowing practice management CE strays away from the fundamental purpose of continuing education, and risks creating a double-standard for technical competence between financial planners that work in a practice, and financial planners who own a practice. Perhaps that means the better solution is to improve the practice management tools, resources, and content that are available in the first place, so that practice management can simply be its own reward, and justify its own ROI, for those who choose to own and operate a financial planning business?

The inspiration for today's blog post is the recent announcement by the CFP Board on potential changes to the continuing education requirements: specifically, allowing up to 4 hours of CE credit for practice management content (combined with credits for pro bono activities). Under the CFP Board's proposal, practice management content would be defined as "focused on the planning, development and management of a CFP professional’s business operations, office management, business model design, budgeting processes, and leadership."

The proposal appears to acquiesce to a long-standing request from many experienced CFP practitioners, who have asked that at least some practice management content be eligible for CE. For instance, earlier this year, industry consultant Tim Welsh noted that in today's difficult environment, planners are spending more time than ever just trying to build and maintain their practices, raising the question "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 one?"

Purpose Of Continuing Education

The concept of continuing education exists in most professions. Broadly speaking, it is intended to ensure that the practitioner remains up to date on job skills - including and perhaps especially those not necessarily used very often - and up to date on the latest developments in the professional body of knowledge. Thus, for instance, CPAs have substantial Continuing Professional Education (CPE) requirements that help to ensure they stay up to date on the latest tax law changes, and doctors have ongoing Continuing Medical Education (CME) obligations to ensure they're current on the latest medical procedures, treatment options, and available prescription drug solutions in their specialty.

The underlying principle is that it's in the interests of both the public and the profession itself to have some minimum requirements in place to ensure the practitioner remains up to date. Not only is an undereducated, outdated practitioner at risk to, perhaps unwittingly, inflict harm on the public, but such professional negligence errors can also reflect badly on the profession at large. In essence, it's not enough to simply let competitive pressures play out - after all, "bad" practitioners who don't stay up to date ostensibly will eventually lose clients to "good" practitioners who do - because the public ramifications of professional malpractice impact all members of the profession. Thus, continuing education requirements were established to ensure a minimum level of competence is maintained for all practicing professionals.

No Practice Management As Continuing Education

Because the fundamental focus of continuing education is a minimum of technical competence, to protect the public and the reputation of the profession itself, many professions do not recognize practice management content for continuing education. Thus, for example, while there are many providers of practice management advice for doctors, it is generally not eligible for Continuing Medical Education. After all, who wants to go to the doctor who skipped the classes on the latest medical treatment for your problem, to instead learn how to do better marketing or implement new billing software?

In a similar vein, I struggle to see why financial planners should be allowed to qualify practice management content as continuing education - are we really helping the public recognize a professional by encouraging planners to skip some classes on the latest tax laws they need to know to help their clients, allowing them instead to go to classes on marketing, sales, or billing software? Do we help to protect the public from harm and professional incompetence by letting practitioners off the hook for keeping their technical skills up to date?

Practice Management CE Is Less Necessary Than Ever

The most commonly stated reason for advocating practice management to be allowed for continuing education is, as articulated by Tim Welsh's quote earlier, the idea that planners who have knowledge but don't know how to deliver financial planning won't be able to serve clients anyway. Especially in this difficult economic environment.

However, it's important to note that several years ago the CFP Board added a category for "Trust and Communication" to the Principal Topics list, which covers content on communication, counseling, and working with clients through their values, biases, and behavioral characteristics. In the past, many grouped such sessions under the broad umbrella of "practice management" but such content is now eligible for CE entirely on its own. Consequently, for better or for worse, the expansion of CE to include "practice management" content is really about the business of financial planning, not the interpersonal delivery of it. Which means a "need" for practice management courses implies a need for financial planners to learn more about the business of financial planning.

Yet embedded in this statement is a fundamental - and I believe, incorrect - assumption: that the only way to serve clients is to run and operate a financial planning business. Certainly, at some point in the past, the concept of being a financial planner and a business owner who managed his/her own practice were essentially synonymous terms - every financial planner ran his/her own practice, almost by definition.  In the 1980s and 1990s, there were no practices hiring financial planning analysts and associates; there were no jobs for people who simply wanted the responsibility of taking care of an existing base of clients but not the weight of building a practice and going out to get new clients. You built your business from scratch, or you didn't survive. Period.

Over the past decade, though, there have been an increasing number of staff positions available for financial planners, in a variety of businesses types and roles, that allowed competent practitioners the opportunity to serve clients without the responsibilities of practice management and business ownership. And that trend appears to be continuing even further in the coming decade, as more and more financial planning firms gain in size and scale, and more financial planners enter the profession into those larger firms that not only don't require them to build their own practice from scratch, but provide a career track that means the person may never be required to build and cultivate their own practice!

Simply put, there is actually a growing base of practitioners who work in financial planning practices, for whom practice management content is not relevant, even while there is perhaps an increasing struggle and need for practice management content for those who are business owners.

Practice Management CE Creates A Double Standard

Because of the emerging dichotomy between financial planners who own practices, and financial planners who work in practices, allowing practice management CE essentially creates a double standard - under the proposed requirements, CFPs working in practices would need to get 40 hours of technical content CE credit, while CFPs who own practices would only be required to get 36 hours of technical content (supplemented by 4 hours of practice management content).

Yet there is little logical or professional reasoning to support such a differentiation. Why should business owners have a lighter burden for technical content? Yes, it is a greater burden for business owners to keep up on technical content and enroll in practice management courses... but such is the burden of business ownership. With the higher risks and the greater responsibilities come the larger rewards - that's the trade-off.

Practice Management Should Be Its Own Reward

I won't dispute the reality that running a practice takes additional time and effort, that many financial planning practices are not run very well in today's world, and that a lot of business owners could use more practice management continuing education. But is it really so onerous to suggest that a business owner who reaps all the rewards of a successful practice should find a way to take 1 hour of practice management content every 6 months (which would be 4 credits every 2 years) without double-dipping that hour for CE credit? The reality is that for those who continue to choose to run their own practices, getting practice management content should be its own reward!

At the same time, I do think there is a secondary challenge worth acknowledging - at most conferences, practice management sessions tend to get a lower turnout, with the implication that the poor attendance is attributable to the lack of CE credit.  Having attended many practice management sessions myself, though, I have to admit that the programs are often either too broad, too bland, or not focused enough to be relevant to my own practice. Given how incredibly diverse financial planning practices are, perhaps that means the simple reality is not that practice management content needs CE to succeed, but that we need to develop better programs and ways to deliver CE that makes it more relevant to audience members that have a diverse range of practices, or alternatively to hone practice management content to be easier for business owners to find the content that is relevant for their practice?

In other words, maybe the real reason that financial planners are struggling in their practices is not that they need practice management content that isn't eligible for CE, but simply that they need better practice management content, tools, and resources in the first place, and that the number of truly quality practice management content providers is simply too few? After all, if the real problem is poor content, the last thing we need to do is subsidize and incentivize the poor content by offering CE for it (and raising the cost of conferences as events feel compelled to register every practice management session for CE and pay the associated CFP Board fees) instead of demanding that the content simply be better in the first place! Why is it so impossible to imagine content that's good enough to justify its own ROI, such that investing in it would be its own reward for the business owner regardless of CE?

So what do you think? Should practice management be eligible for CFP CE? Does it create a double standard between business owners and non-business owners? Should practice management be its own reward? Is the real problem that practice management content isn't eligible for CE, or just that most content isn't good enough and relevant enough in your practice? Share your own thoughts here - and be certain to send them in to the CFP Board as well, which is accepting comments at regarding all the proposed changes through the end of the month.

  • Joe Pitzl

    It depends how you define practice management. If the practice management CE is focused on the delivery of planning, back office operations necessary to fulfill our duty to our clients, etc., I think it makes plenty of sense. But I don’t think we should be providing CE for best practices in HR, hiring & managing staff, technology upgrades, etc.

  • Marc Freedman

    Hi Michael –
    I think allowing CFP’s the opportunity to earn CE credits for Practice Management Tools that allow them to run a better business is a mistake. CE’s should be offered to CFP’s when the individual is using their time to become better educated on content around the CFP curriculum that grows their knowledge base so that they can become better advisors to clients and truly find solutions that place the interests of their client first.

    The issue is that less of the RIA community is willing to attend and listen to CE presentations by product vendors (though they will attend CE presentations by their peers) and honestly some of the best CE content is delivered through the former channel.

    The hue and cry to allow CE’s for practice management is a search for alternative means to gather CE’s – and a statement that RIA’s no longer want to earn CE’s from vendors that manufacture products and/or distribute them. I think that is a HUGE mistake.

    Earning CE’s to learn how to use a new-fangled piece of software, be introduced to CRM reporting, office-process capabilities or Kolbe tests for employees is not CE worthy (in my opinion). Nor is it CE worthy to hear from other planners on how they run their practice. Educational, yes! CE worthy, Absolutely not!

    The reality is that with the emergence of small RiA shops appearing around the country, they have limited budgets. They attend conferences for networking, and tools to help them better build their business. Some have succumbed to earning CE’s over the internet (so that they can better use their time at a conference to better build their business). These conferences now overflow with business building,coaching, outsourcing services, social media ‘experts’ and technology specialists. Make no mistake these ‘exhibitors/presenters are looking for people to buy their services – and thus it’s intriguing to advisors who work in small offices to use their time to gather the best bang for their buck.

    Take a look around the FPA Conference in San Antonio this year and consider the dwindling number of investment/insurance/BD’s in attendance as compared to increasing number of vendors that fall into the “practice management category”.
    These investment/insurance/B/D vendors feel less and less welcome each year; yet these are the vendors with the excellent CE worthy content, experienced and engaging speakers, and resources that can be used by attendees for little cost. Not to mention the fact that they have the pockets that keep conferences vibrant and well-attended.

    Smartly, in my opinion, these firms have decided to spend their money elsewhere because the RIA world has snubbed their noses at both them and their wholesaling community. The RIA community needs to welcome them back – and give back to them in an equal manner from which they TAKE from them.

    They (RIAs) will learn that rich content, and CE-relevant educational tools are available by simply opening their doors and inviting these professionals to visit their office and allowing them to help.

  • Cindi Turoski

    Hi Michael,

    I agree that CE should be educational on technical financial planning concepts to better advise clients, not practice/business management for all the reasons you state.

  • Michael Kitces

    If you look at the CFP Board’s own definition of practice management in the context of the proposal, it’s much more your latter description than the former. I suppose a better and more accurate label would truly be “business management CE” as much of the content description is really around the management of a business (HR, operations, business metrics, etc.).

    Notably, at least some aspects of “delivery of planning” would likely fall under trust and communication as well (although I’ll grant, probably not all).
    – Michael

  • Dr Mary Gresham

    In my profession of psychology practice, we also often do not offer CE’s for practice management. We also are “sold” to by numerous vendors of psychological materials.However, I do believe there is a place for practice management CE’s in both fields. What you might know and have learned through years of trial and error in developing and managing your business is unknown by new practitioners who are just now going on their own and they don’t have as much room to make mistakes because of the costs of their education,etc. Yes, our fields should give CE’s and also describe the workshop as Beginner, Intermediate and Advanced.You will be spared the tedious content but the beginners in self-employment need to know this material.

Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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