With the CFP Board’s ongoing efforts to continue growth in the number of CFP certificants, the organization has been involved in a number of ongoing initiatives, from its Women’s Initiative to bring more females into financial planning, to its decision to convert to a shorter computer-based testing format to make the CFP comprehensive exam less daunting.
In a surprise announcement, though, the CFP Board has just declared that after adding a “Capstone Course” requirement to the CFP curriculum in 2012, and including the requirement for not only new students but also those who are seeking to challenge status for the CFP exam, the organization is now offering to waive the capstone course requirement for challengers who instead simply submit a comprehensive financial plan to be assessed by peer reviewers. In addition, the CFP Board also announced that a wider range of “support” activities will be permitted to count towards the requisite 3-year experience requirement to earn the CFP marks.
While arguably the change to the Capstone course is a positive, the adjustments to the experience requirement may now be opening the door for virtually anyone with a job in the broad financial services industry (or even journalists writing about it) to qualify for “financial planning” experience, despite having absolutely no actual experience being involved in the creation of a financial plan, supporting its delivery, or interacting with a client! And perhaps even more concerning, why is it that both the prior Capstone and Experience requirements were implemented with a lengthy public comment period and process, but the CFP Board now sees fit to change those rules at its own whim?
CFP Board Capstone Course Requirement For Challenge Status
For decades, the standard educational requirement for CFP certification is that prospective CFP certificants must complete a series of (typically 5 or 6) financial planning courses, but those who already have certain degrees or designations – including a Ph.D. in business or economics, a law degree, a CPA license, or the ChFC, CLU, or CFA marks – have the educational requirement waived, and are eligible for “challenge status” to sit for the exam.
In 2010, however, the CFP Board’s decided to add a “financial plan development course” to the educational requirements. Also known as the “Capstone” course, the idea was to ensure that students were not only trained in the underlying knowledge of the CFP topic list, but also had at least some training and experience in actually developing and putting together a financial plan. The Capstone course took effect for all students who began a CFP program in 2012 (or later), and notably was required even for those pursuing challenge status. As a result, even a practicing ChFC or CPA who had been delivering their own financial plans for years still had to go “back to school” and take the Capstone course.
In a new announcement today, though, the CFP Board has declared that those pursuing challenge status will no longer have to take a Capstone course, and instead will have an “alternative” Capstone requirement of simply submitting a comprehensive financial plan for peer review (ostensibly similar to NAPFA’s own membership requirement). As the CFP Board put it in their own press release:
Financial Plan Development (“capstone”) Course Alternative.
What’s New: Applying only to candidates eligible for who have also met the certification’s requirement, the alternative “capstone” requires submission of a comprehensive financial plan and assessment by CFP® professional reviewers.
What Stays the Same: The alternative “capstone” requirement continues to serve the purpose of assuring the public that a candidate has completed and communicated to a client a comprehensive financial plan.
Although the CFP Board has not provided detail to the rigor of the peer review process or exactly how it will be executed, I have to admit that this seems like a positive overall for the CFP marks. While conceptually the Capstone requirement is certainly a positive – to ensure that those who hold out as a CFP certificant have, at least once in their lifetime, actually completed a comprehensive financial plan! – it was arguably a bit absurd to require those who have actually been practicing financial planning for years or even decades to go back to school for a capstone course. With the “alternative Capstone” requirement of those who actually have experience simply submitting a sample of their work, the process seems reasonably expedited.
The news may be especially appealing for those CPAs who have been delivering financial planning for years, but either did so with “just” their CPA license, and/or the PFS credential, but had never earned the CFP certification. On the other hand, this announcement may be a significant blow to CFP educational program providers like Boston University, Keir, Dalton, and the College for Financial Planning, that have spent the past several years marking their Capstone-plus-Exam-Review programs to affiliated professionals, only to find that the CFP Board may have just waived the Capstone requirement for many likely challengers. Not to mention students who had already paid to go through the CFP Board’s prior Capstone requirement and were planning to sit for the exam in 2015, who have now discovered that they didn’t need to pay for a Capstone course after all!
Experience Requirement For CFP Certification
Also included in the CFP Board’s announcement regarding the changes to the Capstone requirement, was a “new initiative” to expand the definition of experience for the CFP Experience Requirement to include a wider range of “support activities”. According to the CFP Board’s press release:
Expanding the Definition of Experience Requirement to Include Support Activities.
What’s New: To recognize the breadth and depth within the financial planning profession as part of its , CFP Board will now review activities and responsibilities reflecting financial planning knowledge and competencies that indirectly support the financial planner and/or the financial planning process. Depending on duties and responsibilities, partial or full qualifying credit may be granted. New experience positions or duties that are eligible, such as employee benefits administration, financial planning compliance, or journalism (financial planning topics) will be considered on a case by case basis.
What Stays the Same: Candidates for certification must still meet CFP Board’s Experience requirement of . Alternatively, candidates may choose an accelerated two-year apprenticeship Experience option, working under the direct supervision of a CFP® professional and having responsibilities in all steps of the financial planning process.
Notably, under the CFP Board’s rules, providing direct support of personal delivery to the client for any of the six steps of the financial planning process was already eligible under the experience standards. Thus, the primary impact of this change is that it grants experience credit for anything evenly indirectly touching the financial planning process – as the CFP Board notes, including a job in compliance, employee benefits administration, or even financial journalism.
Arguably, this change to the experience requirements is far more concerning. The fact that such a wide range of “indirect” experience now qualifies basically means the CFP Board has blessed the experience requirement on anyone who has any job in any way attached to the financial services industry! Or as the CFP Board’s announcement acknowledges, even jobs outside of the financial services industry, like simply writing about financial planning, but never actually being involved in its delivery or in working with a client in any way, shape, or form. Does that mean any personal finance columnist with a weekly (or even monthly?) column for the past 3 years has now satisfied the CFP experience requirement? Is there an audience requirement? Can anyone just launch their own personal financial planning blog for consumers, call themselves a “journalist”, and meet the CFP educational requirement after 3 years’ worth of posts, never having actually interacted with a single client, or even discussed financial planning with another human being?
When coupled with the CFP Board’s decision to implement the 2-year apprenticeship option in 2012, what was once a 3-year requirement for real financial planning experience, has now been watered down to 2-years of actual planning experience or 3 years of “anything that has to do with the financial services industry.” It’s hard to see how this is anything but a lessening of the minimum experience standards for CFP certificants, allowing an even wider range of not-actually-financial-planning-or-client-related experience to still be eligible for the CFP exams.
CFP Board Changing Rules Without Stakeholder Input Through Public Comments?
Perhaps most notable about the CFP Board’s announcement, though, is the fact that it implemented these changes without any public comment period (and even worse, announcing it on a known-to-be-slow news week when it is less likely to be seen!) – a significant change, given that the current experience requirement was itself only established after a public comment period in 2011, and similarly that the current Capstone requirement was only implemented after a public comment period in 2009. In other words, the current rules were established after a specific process to gather stakeholder input and provide feedback before implementation… and now the CFP Board has decided to change those rules to accomplish its own goals, without re-engaging planners for any input.
In fact, it’s notable that the CFP Board has not engaged stakeholder input on any of its recent changes or initiatives. The last time I can recall the CFP Board had an open comment period on anything was back in 2012 (unless anyone can think of something more recent?), with changes to the bankruptcy disclosure requirements and then also potential changes to the CE requirements later that year. And those comment opportunities occurred after a flurry of comment periods in the preceding years on everything from updates to its disciplinary process to the aforementioned changes to the experience requirement and the addition of the Capstone course.
Which raises the question – especially given the CFP Board’s ongoing debacles regarding its compensation disclosures as well – of whether the CFP Board is risking further loss of support from its stakeholders by not including them in the process of an ongoing litany of rules changes and new initiatives? Is the CFP Board really serious about stakeholder input, or is the organization now just using comment periods strategically as it sees fit for its own ends instead? And how exactly does the decision to reduce the CFP experience requirement and offer the CFP marks to those who have no actual financial planning experience serve to advance the CFP Board’s mission to protect the public?
So what do you think? Are these “new initiatives” an improvement to the CFP marks, or a watering down of the requirements for CFP certification? Should the CFP Board have engaged in a public comment period before making the changes? Share your thoughts in the comments below, or email the CFP Board’s Board of Directors at [email protected]!