Last week, leaders from the CFP Board, including CEO Kevin Keller, board of directors chair Nancy Kistner, and chair-elect Ray Ferrara, traveled to the FPA Retreat conference and NAPFA’s national spring conference. The purpose of the visit was not just to participate in the conference itself or check out the latest growth of the organizations; instead, it was to gauge support from these gatherings of the experienced planner community for a potential new initiative: the CFP Board is considering whether it should begin to offer CFP Continuing Education (CE) credit to its certificants, going into direct competition with the CE sponsors it is simultaneously responsible for overseeing, in an effort to raise the quality of CFP CE.
Not surprisingly, given the fiduciary focus of both FPA and NAPFA members and the efforts of the respective organizations on the Financial Planning Coalition – which is currently making the lobbying case for why a conflicted organization like FINRA should not be allowed to oversee registered investment advisers – planners from both groups were negative on the proposal, citing the blatant conflict of interest involved if the CFP Board were to compete with those it regulates.
While at this point, the reality is that this is just a preliminary discussion, and not even a substantively drafted proposal issued for comment, it nonetheless raises a more substantive question: is this really the best idea the CFP Board has regarding how to improve the quality of CFP CE, or does this proposal represent a strategic first step towards something more far reaching, like going into direct membership association competition with the FPA and NAPFA themselves? Will the CFP Board back away from the proposal given the nearly unanimous negative feedback thus far, or will it further tip its hand in pursuing a new strategic initiative?
The Current State Of CFP Continuing Education
Unfortunately, the reality is that the current state of CFP continuing education is far from ideal. In recent years, the CFP Board has increased its scrutiny when reviewing presentation materials submitted for consideration, but arguably the net result has simply been to frustrate a lot of well-intentioned educators and conference organizers, while actually punishing few wrongdoers; after all, while the CFP Board may reject a presentation for questionable or overtly product- or sales-centric material on the slides, there’s nothing to stop a speaker from presenting with a “clean” slide deck and just using the microphone to sell directly from the podium. In fact, savvy product sponsors have long since figured out that as long as the slides are simple and apparently objective, there are few repercussions at all to delivering a thinly veiled sales pitched – or sometimes, not even veiled at all – in the middle of a presentation; at worst, the event organizers simply don’t invite the company or speaker back again, which is of little concern since there are dozens and hundreds of either CE events to abuse.
This problematic state of affairs was echoed clearly during the comment period in response to the CFP Board’s proposal to increase the number of required CFP CE credits from 30 every two years up to 40; the organization received a record-breaking 1,100 comments in response to the proposal, of which 85% opposed the increase. And the dominating theme of the negative feedback was clear when perusing the public comments themselves: certificants saw little value in an increase in the continuing education requirements when the current state of CE was already of such low quality. Which means if the CFP Board wants to lift the number of required CFP CE hours – arguably necessary if financial planning will ultimately be recognized as a profession, as the CE requirements for planners are woefully behind other professionals like CPAs – it first needs to clean up the quality of the education itself.
Real Strategies To Improve CFP CE
If the CFP Board’s goal is to improve continuing education credit, there are many strategies available. Perhaps the most important is simply to recognize that ultimately, the quality of continuing education lies not in the slides that the presenter uses, but in the presenting speaker themselves – which means the CFP Board needs to do more to scrutinize who is delivering the CE credit in the first place. To oversee educational presentations without scrutinizing the educator is like overseeing financial planning by ignoring the financial planners and just reviewing their written financial plans; in both cases, the reality is that even good materials are useless in the hands of an untrained and inexperienced planner or educator, while the best in both categories may rely little on their written materials if at all while delivering a quality experience.
To improve CFP continuing education, then, the key step is for the CFP Board to shift from merely reviewing presentations and content, to reviewing the presenters of the information. For instance, many state insurance departments require that the speaker have a graduate degree in the subject matter (or some comparable advanced designation or certification), or five+ years of experience, before being approved as an educator; by contrast, the CFP Board has no apparent speaker requirements whatsoever. In addition, the CFP Board could require that when event organizers submit names for CFP CE credit after a presentation is delivered, the organization must also submit the evaluation results of the speaker regarding his/her topic, expertise, presentation skills, supporting materials, and whether the speaker was objective and avoided selling financial products. Consistently low scores, or a consistently high response rate that the speaker was selling his/her products, could result in a “3 strikes you’re out” policy where persistently bad speakers or sponsoring organizations would ultimately be denied CE credit altogether. I suspect major financial services firms would be far more likely to oversee for themselves who they put up on the podium if there was a risk that inappropriate wholesaler sales-pitch presentations could get the organization barred from delivering CE credit!
Reviewing speakers after their sessions and gathering the results of evaluation forms could also be fed into a central “Speaker’s Clearinghouse” maintained by the CFP Board, allowing conference organizers to search the database to screen presenters based on their scores, or to identify top educators to contact for their own upcoming events. This would allow the best CE providers to naturally rise to the top, the low quality to decline into obscurity, and ensure that problematic speakers who deliver sales-pitches-in-lieu-of-presentations can’t just keep hopping from one organization to another delivering poor content that fails to deliver value to attendees and sours certificants on the benefits of quality continuing education.
An Unmanageable Conflict Of Interest
Given the avenues available to improve the quality of CFP continuing education by improving the oversight of speakers and the results/outcomes of presentations, it’s hard to see why the CFP Board’s “potential” proposal to begin offering CFP CE credit directly to certificants is an appropriate course of action. Although the organization’s willingness to at least broach the conversation and look before it leaps is commendable and consistent with Keller’s leadership in recent years, the prospective conflict of interest for this initiative is quite significant. After all, continuing education sponsors operate at the sole discretion of the CFP Board, which has the unilateral right to approve, control, or revoke the sponsor’s status, and approve or deny any/every presentation the sponsor submits; in other words, the CFP Board functions as the sole regulator for its CE sponsors. Will the CFP Board really be able to consistently review, consider, and approve or deny “outside” presentations in the same objective manner as its own “inside” presentations? That’s kind of like the SEC announcing that it’s going to roll out its own direct-to-consumer RIA to provide ongoing investment advice to the public, and “promising” that it will oversee and maintain compliance for its internal RIA in the same manner as everyone else. Does anyone really think the SEC’s audit of its own RIA will consistently remain the same as its external audits? It’s hard to see how a path like this won’t eventually stray from the ideal, whether for the SEC, or the CFP Board. And of course, if the CFP Board is going to oversee its own content, speakers, and results, then it will have to roll out a feedback program anyway… in which case, it may as well do so for all CE providers!
In addition, the reality is that the conflict of interest goes far deeper than just the oversight of content and CE credit. The CFP Board charges hard dollars to outside CE sponsors to maintain their status as a CE provider, and applies further charges to each and every hour of CE credit the organization wants to approve. This represents a cost to “outside” CE sponsors – not to mention the time, hassle, and stress that event organizers must deal with to complete the process – that the CFP Board would not have to bear for its “internal” CE offering. In other words, not only would the CFP Board be competing with those its oversees, but there’s a remarkably uneven financial playing field for the competition.
The conflict gets even worse when it comes time to market a CFP CE offering, which every one of the current 1,250 CE sponsors must do by spending real dollars on advertising or other marketing strategies; in fact, if a CE sponsor wants to do a mailing to CFP certificants, it must pay the CFP Board thousands of dollars for the “privilege” of just doing one printed postcard mailing to those who might need CE credit! By contrast, a CE program offered directly by the CFP Board faces no such costs; it owns the mailing list for all CFP certificants, by virtue of being the organization that issues their certification, and therefore faces a zero cost to send out as many solicitations for its own programs as it wishes, even while it requires significant charges for any/every other CE sponsor to do the same. How long would it be before the CFP Board started steering people away from its 1,250 CE sponsors and including its own CE offerings when it sends out reminders that a certificants renewal is due soon and he/she still needs a few more CE credits, exacerbating the conflict of interest even further?
While CFP Board CEO Kevin Keller was on record at NAPFA being dismissive of these conflicts, stating “everybody has conflicts” advisors don’t appear to be so sanguine; an impromptu poll of the audience at FPA Retreat regarding the CFP Board’s proposal yielded 99% of advisors opposing, with the hand of only one, lone individual supporting the idea. And as good advisors know, when the playing field is uneven and rife with conflicts, it creates an environment where the good providers struggle to gain market share, while the bad providers continue to abuse the system – not exactly an appealing educational ecosystem for the future of financial planning, as it means the CFP Board going into competition with its CE sponsors may mean CFP Board is the only CE provider in the future!
Why Are We Having This Conversation?
In the end, this hopeless stream of conflicts raises an even more fundamental question – given the obvious concerns, why is the CFP Board pursuing this path in the first place? After all, it seems somewhat absurd that the CFP Board has been attempting to ramp up its own lobbying efforts in recent years regarding a fiduciary duty and eliminating conflicts of interest, and has also been arguing hard against having FINRA oversee RIAs in large part because of their conflicted regulatory history… and now feels it’s appropriate to be dismissive of the problems inherent in conflicts of interest to suit its own proposals? Not to mention the fact that offering CFP CE credit directly to certificants represents a significant threat to the value proposition and ultimately the membership base of the FPA and NAPFA – undoubtedly making Financial Planning Coalition meetings a lot more uncomfortable and far less productive since the CFP Board dropped its bombshell, and at a delicate time given the potential progress from the Department of Labor’s fiduciary efforts and the SEC’s anticipated actions on Sections 913 and 914 of Dodd-Frank, both of which may require the Coalition to work hard, together, to address whatever proposals roll out in the coming months.
Yet perhaps, ultimately, that’s the point: that the CFP Board’s proposal is not really about just raising the quality of CFP CE (for which there are many alternative solutions as discussed above), but instead is about undermining the FPA and NAPFA with the final goal of making itself not just the grantor of the CFP certification, but also the membership association for CFP certificants as well. Technically speaking, the CFP Board is a 501(c)(3) organization with a public-purpose charter, while the FPA and NAPFA are structured as 501(c)(6) membership organizations, and the path for a 501(c)(3) to become – or add – a (c)(6) organization is messy to say the least, and would take some creative legal wrangling. Nonetheless, the reality is that a single, consolidated organization that both grants the certification and serves as the membership association is not unheard of; many “CFP Board” entities in other countries have both sides rolled into a single organization, and even within the US other respected organizations like the CFA Institute and IMCA have managed to serve as both the credentialing and de facto membership organization at once.
Arguably, in a world where FPA and NAPFA combined only serve about 25% of all CFP certificants, as NAPFA still has a relatively small base and the FPA’s market share of CFP certificants has declined precipitously in the past decade, there is an unmet need for a focused membership association for CFP certificants, and frankly the CFP Board’s CEO and Board of Directors would be remiss in their duties if they weren’t at least discussing the possibility. And as I’ve stated many times in recent years, the FPA’s long refusal to embrace CFP-centricity has been leaving the door open to a competitor (existing or new) to rise and meet the need instead, as there are simply too many CFP certificants unaffiliated to a membership association to let such a business opportunity to pass by. Arguably, FPA’s recent shift to focus more directly on CFP certificants, with their renewal of the “One Profession, One Designation” tagline, is an attempt to finally rise up and meet this need, and NAPFA is continuing its growth efforts as well, but the CFP Board’s apparent strategic shift means the pressure is now on both organizations to demonstrate that their changes and growth efforts aren’t too little too late. Time will tell.
Nonetheless, the bottom line is that the CFP Board’s proposal is not just about improving the quality of CE – something that absolutely does need to happen, and which I have long supported – but reading between the lines also signals a strategic shift that it may be eyeing a future offering of a membership association as well, if the FPA and NAPFA can’t step up to fill the current void. If the CFP Board is really serious about “just” improving the quality of CE credit, there are many paths available, including an increased focus on speakers and the evaluations of presenters and their sessions (as discussed above), and it can easily back away from its conflicted and poorly supported proposal and go one of these alternate routes instead in the coming months. On the other hand, if the reality is that the CFP Board is angling for a future role as a membership association, except to hear another version of this conflicted proposal floated in a more substantive form later this year. Once again, time will tell.
In the meantime, I hope you’ll share your thoughts as well in the comments below. Do you think having the CFP Board offering CE credit directly is a good way to improve the quality of CE? Is it feasible for the CFP Board to manage the inherent conflicts of interest in this model? Do you think the CFP Board is making a strategic shift towards offering itself as a membership association in the future? Do you believe that would be a positive alternative over the FPA and NAPFA, or a negative? What do you think?
(Disclosure: Kitces.com offers CFP CE credit for its publication The Kitces Report and is a registered Continuing Education Sponsor with the CFP Board. In addition, Michael Kitces is a regular speaker at numerous continuing education events organized by other third-party Continuing Education Sponsors registered with the CFP Board and offering CFP CE credit.)