The Profession’s Evolution as Viewed by CFP Board Veterans

By Linda Leitz

As NAPFA celebrates its 40th year, I asked several NAPFA members who have served as chairs of CFP Board for their thoughts about the evolution of the profession of financial planning. They included Dan Moisand, CFP^®, principal of Moisand Fitzgerald Tamayo LLC, the current chair of CFP Board; Richard C. Salmen, CFP^®, CFA, president of Family Investment Center Inc., who was CFP Board chair in 2018, when the current CFP Board Code and Standards were published; and Susan M. John, CFP^®, managing director financial planning for F.L. Putnam Investment Management Inc., who was CFP Board chair in 2019, the year that the Code and Standards were implemented and who also served two terms as chair of NAPFA’s board. Kevin R. Keller, CAE, who has served as the CEO of CFP Board since 2007, also provided insights.

Below, these thought leaders share their views on the progress of our profession, as well as hopes for the future.

How Financial Planning Differs from Financial Services

Financial planning as a profession differs from the broad financial services industry in several ways, the leaders agree, with the most important being a move away from product sales. “The development of financial planning as a profession focused on the process, not the products,” says Salmen. Moisand sees financial planning as “truly client-centric” in finding what clients need and want, instead of placing products. He adds, “The marketing all sounds the same, but it’s really a totally different approach and mindset.”

This distinction was seminal in the formation of NAPFA, with its Fee-Only requirement for membership, as indicated in “The Beginning of NAPFA” in the April 2023 NAPFA Advisor. That principle has remained at the heart of NAPFA’s mission ever since.

Progress Through the Years

Progress has occurred beyond the shift away from an emphasis on products. Major components of establishing a profession and having it recognized as such include educational requirements, credentialing, and regulation for competence and ethics. Keller points out that the CFP^® certification is now seen as the standard in financial planning, and CFP Board has done much to increase public awareness of the credential. Indicative of its value, firms of all sizes and various business models have adopted financial planning as a primary business model.

Salmen sees the enhanced Code and Standards as a major accomplishment in the profession. Before its implementation, CFP^® professionals were held to a fiduciary standard when providing financial planning but only a suitability standard when providing limited advice, even to the same client. This led to “hat switching,” which too often allowed product sales to have lower ethical standards than financial planning.

In 2011, while serving as NAPFA chair, John shared NAPFA’s goal that, by 2020, financial planning would be recognized as a true profession. That goal is being realized, according to John, with a clearer and more robust career path for those entering the field. She sees the many colleges and universities offering CFP^® courses—many of them also offering personal financial planning degrees—as a likely source of trained professionals.

Moisand hopes that as more schools incorporate financial planning in their programs, including degrees in financial planning, more students will become aware early in their education of financial planning as a viable career path. This dovetails with CFP Board’s efforts to expose people to financial planning as a career in high school and early college. Currently, there are still large numbers of students who start with one degree and change to a financial major or add financial planning courses after discovering them while in college.

Focus on Relationships

While the shift from a product orientation has been huge, the emphasis on behavioral finance and the psychology of people’s relationships with money may have the biggest impact on the profession going forward. The sales orientation of the broader financial services industry means its members may look at the psychology of convincing consumers to buy, but not necessarily look at the more fiduciary approach of addressing financial biases, fears, and motivations. Financial planning focuses more on understanding clients to better meet their needs, not just to make a sale. Keller points out that CFP Board recognizes and incorporates the psychology of personal finance as an integral part of financial planning. All of the current Ph.D. programs in personal financial planning have a major focus on these behavioral issues.

Moisand describes how that change has filtered into client relationships. “The conversations with clients are more about truly important and impactful matters than when I first got started,” he says. “More people recognize the need for help with personal finances and how all the parts of their financial lives are intertwined, and more people see money as a tool to support a fulfilling life. It’s also great to see so many new people able to enter the profession for a professional level salary without sales pressures.”

Visions for Continued Progress

This year marks the 50th anniversary of the CFP^® certification, and our ranks continue to grow. Keller anticipates that there may be 100,000 people with the credential in 2024. High standards for the CFP^® credential, combined with this growth, continue to be a priority. Keller notes that CFP Board now has a Competency Standards Commission that is charged with regularly evaluating competency requirements.

“Financial planning is still emerging as an established profession,” Keller says, “and the work we’re doing at CFP Board and other organizations in the financial advice ecosystem will accelerate that recognition —not only in the public eye but also in the eyes of financial planners themselves.” The demographics of new CFP^® professionals are promising for the future of the profession, with over half of the most recent new CFP^® professionals under age 35. Additionally, the number of new CFP^® professionals who are women is growing, as is the ethnic and racial diversity of our ranks.

These positive changes in the demographics and standards of our profession will fuel one of John’s hopes, which is that we will continue “to bring planning to the ‘many’” as professional and educational requirements evolve to stay in sync with current times and the needs of consumers.

But there’s another step that could truly launch financial planners to another level, Salmen says. He would like to see “financial planning regulated as a profession in the next 10 years rather than being regulated for the underlying investment and sales or product processes as it is now.” He points out that while CFP Board has a Disciplinary and Ethics Commission that does some of what regulators would do, it only governs those who choose to be CFP^® professionals. There is no limitation on who can put themselves forward to the public as financial planners. That needs to be fixed, he says.

Moisand says that consumers are more willing to pay fees to receive fiduciary advice, which is driving the shift away from commissions to fees, with or without regulations. He also likes the potential for the larger field of financial services to differentiate between advice and sales.

As these conversations with industry leaders indicate, financial planning has entered the ranks of professions. NAPFA can continue to have a role in leading the way to increasingly high standards for that profession, as well as providing a home for top professionals to meet and collaborate.

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Linda Y. Leitz, Ph.D., CFP^®, is a NAPFA-Registered Advisor in Colorado Springs, CO.

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