It was August 24th. I had just awakened early in the morning in Sydney, my final day there after serving as a keynote speaker for the Australia Portfolio Construction Forum, and I was looking through my morning email – which was actually the prior afternoon’s August 23rd email at home in Washington DC, given the 14-hour time zone difference. Earlier in the week, I had caught the surprise announcement from the FPA that CEO Marv Tuttle was stepping down, to be succeeded by then-current FPA COO and Associate Executive Director Lauren Schadle, and read with interest Schadle’s comments that FPA would be stepping up its focus on those financial planners who are serious enough about their craft to seek out the CFP certification.
What caught my eye that morning, however, was an unexpected response to Schadle’s comments from American College President and CEO Dr. Larry Barton. The College, through which I have proudly earned 6 professional designations, including the CFP itself, is one into which I had invested a lot of time, money, and effort, both during my studies, and in the years thereafter as I have continued to promote its advanced educational programs and even recently taken part in providing content for their latest RICP designation.
Yet after reading Barton’s response, I felt for the first time a true embarrassment in being an alumni of the American College of Financial Services, and shame in being a holder of what was once its defining credential, the CLU designation.
Unfortunately, it’s difficult to pinpoint to one part of Dr. Barton’s statement in particular that was the problem, as the entire press release contained a sad array of mischaracterizations and misrepresentations. There was the bizarre part where Barton equated the CFP certification with being a fee-only planner, despite the fact that neither the FPA, nor the CFP Board itself, require in any way that CFP certificants practice on a fee-only basis. The only requirement is that such individuals act in a fiduciary manner, and I would hope that even Dr. Barton can agree that if someone happens to be compensated with a commission for selling a financial services product, where the client buying the product did so based on the advice of the seller, that it should still be a product that was actually in the client’s best interests in the first place?
The American College of Financial Services Educational Monopoly? CFP Vs The ChFC And CLU Designations
I suppose the breaking point for me was probably Dr. Barton’s declaration that a “designation monopoly” was “clearly not in consumers’ best interests” and that consumers should have a choice of designations that include the College’s own CLU and ChFC. Never mind the fact that in truth, the American College of Financial Services is the sole, “monopolistic” provider of CLU and ChFC education for decades - as the American College's own materials note, it has been the sole organization to award the CLU designation since 1927 (and the ChFC since 1982) - while the CFP certification is actually provided by over 340 registered certificate, undergraduate, graduate, and doctoral programs at 200+ institutions across the country, a tremendous growth since the CFP Board was spun off into its own certifying body to eliminate the CFP educational monopoly in 1985 and provide better oversight, administration, and enforcement of the credential. The added bit of irony to the whole situation: the CFP was called a monopoly, despite the fact that it is actually one of the most successful programs that the American College itself provides, as one of those 200+ institutions, possibly even outpacing the enrollment in the College’s own monopolistic designations!
But the even more disturbing point underlying Dr. Barton’s statement is the apparent implication that it is anti-consumer to have a clear minimum standard like the CFP for professional competency so that consumers understand who actually has the training, education, and experience to give advice, versus who is merely licensed to sell a product. Yes, it is true that having a minimum professional standard does represent a barrier to entry, yet the reality is that in fact such barriers to entry are the hallmark and defining characteristic of true consumer-centric professions!Thus the origins of P. Kemp Fain's famous 1987 paper and 1988 speech, "one profession, one designation" - or as I'd frame it, at least "one profession, one [minimum] designation"! Requiring minimum standards for professionals is not monopolistic; it is the very essence of consumer protectionism!
By comparison, does Dr. Barton believe it is “anti-consumer” for states to require that someone actually get a medical degree as a recognized, uniform minimum standard, before being allowed to slice a patient open and operate, and that instead states should encourage “the process of [surgery] to be used as broadly as possible, regardless of the [education] a [doctor] may choose to pursue?” for the sake of allowing more consumers to get access to “doctors” (a term I use in quotes here, as it’s not even clear how to define who is a doctor when there’s no clear minimum standard!)? And is it really a “monopoly clearly not in consumers’ best interests” to require prospective surgeons to choose from one of the mere "monopolistic" 138 different medical educational institutions accredited in the US? Just as the absurdity becomes self-evident with the analogy for doctors, so too is it absurd in the case of financial planners to suggest that minimum competency standards are somehow anti-consumer, or that a certified educational program taunt openly amongst a few hundred educational institutions is somehow a monopoly.
The Roots Of The CLU Designation
Perhaps the worst irony of the situation is that the American College of Financial Services itself was founded by Solomon Huebner, a pioneer recognized as "the father of insurance education" who originated the concept of "human life value" to determine the proper amount of life insurance someone should have, and a man who was committed to establishing a professional minimum standard in his own field of insurance. It was Huebner who created the CLU designation nearly a century ago, decades before the CFP certification was even a vague concept, and helped to craft around it an educational curriculum that would help to separate in the eyes of the public who had met a recognizable standard for minimum competency to be deemed a true life insurance professional. Sadly, the American College was not terribly successful in promoting visibility of the CLU to the public – perhaps because of its insistence on maintaining it as a 100-year proprietary, monopolistic program! – and thus Huebner’s dream of a minimum standard remained only a voluntary certification and not a licensing requirement. In point of fact, this is a rather a sad conclusion to Huebner's vision, given today’s world of senior financial abuse through the improper sale of insurance products, where a stronger minimum competency standard for life insurance salespeople might again go a long way in protecting consumers.
As someone who started in the financial services industry as a life insurance agent, I’m thrilled to have been taught early on the importance of having the knowledge and seeking to be a true professional; within 2 years of getting my insurance license, I had begun my coursework for the CFP certification with the American College, specifically with the intention of using it as a stepping stone to earning the CLU, and becoming part of a proud tradition of people who voluntarily sought out a higher standard for their own professionalism to better serve their clients.
Along the way, I ultimately found the path of comprehensive financial planning to be more personally rewarding than remaining solely with a life insurance focus, and I began to shift my career accordingly. Nonetheless, the value of advanced certification to obtain a better base of specialized knowledge to serve my clients well remained instilled within me, in the tradition of the American College and Huebner’s roots; so much so, that ultimately I obtained every advanced certification that the American College had to offer at the time, “rounding out” my CLU education with the ChFC, the RHU, the REBC, the CASL, and earning the first of my graduate degrees, in financial services. I found all of the American College's programs to be helpful, educational, and valuable in building upon the base of knowledge I had obtained with the CFP certification. They were, essentially, post-CFP specializations, and a refreshing dose of serious education in an industry plagued by bogus designations.
CFP Certification As A Starting Point
In point of fact, I actually view the function that the American College plays as representative of the long-term future of the financial planning profession; the CFP certification is a starting point, but as a minimum standard it is only the starting point, and specialized designations like what the American College offers are the future growth of professional education in a world where “post-CFP” education will become increasingly relevant and necessary for both consumer protection and practitioner success. And the American College itself has the opportunity to once again become a real leader in raising professional standards, and honoring the roots that Solomon Huebner planted for the organization. At least, as long as the College gets back to focusing on providing advanced specialization educational programs for advisors who have met a minimum educational standard like the CFP certification, and stops throwing monopoly rocks from the confines of its own glass house that embarrass both the organization and those who were [once] proud to hold the designations it grants.
In the meantime, I know I still hope for a world where consumers can finally have a clear understanding of who really has at least the appropriate minimum education, training, and experience to actually be an advisor, with a clear standard like the CFP certification as a guidepost. And if some of those advisors can once again proudly state that they have gone through one of the American College’s advanced educational programs to become a specialist in the area in which they practice as well, on top of the CFP certification… all the better.