With the explosion of the internet over the past decade, raw access to data and information has exploded for the average individual, made even easier by the effectiveness of search engines like Google to filter through the volume to find the most relevant content. While most of us enjoy having the opportunity to dig into all of this newfound information, it does paint some potentially troubling implications for many professions, including financial planning, that have historically relied on the delivery of expert information as a core value proposition. If access to information explodes further in the next 10 years the way that it has over the past 10, will this force a change in the core value proposition of financial planners? What does it mean to be a financial planning expert if/when the internet makes all the "expert" information accessible to the average person?Read More...
It is an experience that almost any financial planner has gone through at some point: a prospective client who is totally disconnected from reality. Unreasonable expectations, completely unrealistic goals, and an obsession with the latest get rich quick investing scheme. Sometimes, the prospect can be guided in a more reasonable direction, but often there's just no connection to be made, and we show the prospective client the door, acknowledging that some people we just can't help. We move on to the next prospect, who hopefully won't be such a "bad" future client.
Yet I have to wonder... given the state of financial literacy - or lack thereof - in the United States, many such prospective clients have totally impossible expectations and goals not because they're being irrational, but simply due to financial ignorance. And by excluding such prospective client relationships, are financial planners themselves excluding the majority of Americans as potential clients?
Because if that's the case - that we as financial planners have put ourselves in a position than we can't help the majority of all Americans - then I also have to wonder if maybe it's not the the prospective clients who have the problem... maybe WE are the ones with the problem?
Within the financial planning world, there is often little love for popular consumer "personal finance gurus" like Suze Orman, David Bach, and Dave Ramsey. Whether it's because of their entertainment-style deliver of financial advice (in the case of the former), their bombastic platitudes of overgeneralized advice with little client-specific information (in the case of both), or their controversial views about how to address common problems like debt (in the case of the latter), most financial planners don't seem to think highly of their consumer-popular counterparts.
Yet the success of those like Orman, Bach, and Ramsey - who, in the end, touch the lives of hundreds of thousands if not millions, while the "average" financial planner's impact may only be measured by a mere few dozen or hundred clients - makes me wonder: Maybe there is something we as financial planners could - and should - learn from the success of those like Orman and Ramsey?
Yesterday the US Government Accountability Office (GAO) released the results of its study on the regulation of financial planning, as mandated by the Dodd-Frank Wall Street Reform legislation. Seen by many as a potentially significant step in the recognition of financial planning as a profession, the study came far short of recommending standalone regulation for financial planners, instead finding that the regulatory structure for planners is already "generally comprehensive" and delivering as its primary recommendations... more studies. Nonetheless, the GAO report represents the clearest picture yet of the financial planning landscape, with acknowledgement of the problems entailed in varying standards of care for different financial services channels, and consumer confusion over the myriad of titles and designations that financial planners use.
In theory, the efficient market is supposed to reward the business that create products and services that improve the lives of their customers, while businesses that create harmful or ineffective solutions generate no income and cease to exist. Industries where the marketplace is too inefficient, and/or where bad products and services can result in public harm, receive some type of regulation to ensure the public good. Given the remarkably inefficient nature of marketplace for advisor education, perhaps it's time for some sort of oversight there, too? :/
The members of Generation X and Gen Y have had a unique collective experience, including growing up in the age of computers and (especially for Gen Y) with immersive exposure to the internet and the information resources it provides. Questions that might have required a trip to the library or an Encyclopedia Brittanica can be answered in a 10-second Google search. So if clients can look up a financial question in a few moments on the internet, where does that leave the value of financial planning?
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After taking up the issue at their board meeting yesterday, the CFP Board officially announced this morning that the 80% fee increase for CFP certificants to support a public awareness campaign for the CFP marks has been approved. So now the only question is: Will it work? Will this mark the start of a new dawn for the growth of financial planning as a profession, or an(other) expensive failure in the annals of CFP Board history?
In light of the ongoing debates and discussion regarding the CFP Board's potential fee increase to support a new public awareness campaign, the FPA last week conducted a survey of their CFP members to poll for views about the proposal. And last night, the FPA has released the survey results in an email to members.
As financial planning fights for its standing as a full-fledged profession, we try to demonstrate its core value to society - that going through the financial planning process has a positive impact on achieving a client's goals. Yet for all we proclaim about our beliefs in the value of financial planning, why is it that virtually none of us think financial planning is valuable enough to pay for it ourselves?
Professional designation programs for financial planners continue to expand year by year - as some disappear, others (more?) emerge to take their place. And although many are appropriately critical of some designations in particular, the trend begs the question: is an expanding number of professional designation programs good news, or bad?
