How Financial Planning Can Become a True Profession
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Nearly 50 years ago, at a meeting near Chicago’s O’Hare Airport, 13 individuals met to discuss the creation of a new profession. Five decades have passed. We can lament that a “true profession” was not achieved during this time. However, we should applaud the work of many individuals, both within and outside various organizations. Without the foundations they laid, the achieving the goal of the title of this article would be premature.
Do we now desire to move toward becoming a regulated, true profession? In asking this question, I am inquiring whether we, as financial planners, either individually or collectively through our voluntary industry associations, have convinced the greater public (and the policymakers who represent them) that we should be afforded licensure privileges. In other words, have we laid a sufficient foundation to earn a form of monopoly, in which the use of certain titles is restricted, as well as limiting the ability to practice as a personal financial planner to those who possess that licensure?
There are many prerequisites to becoming a true profession. Have we satisfied those requirements? And if so – do we desire to take the next step – seeking true status as a profession through legislation?
In the sections that follow, I will examine our progress toward each of those steps.
A unique body of knowledge
The first requirement for a profession is the delineation of a unique body of knowledge.
Some of the knowledge required of personal financial planners exists in several other realms. For example, personal and business income tax planning is provided by certified public accountants. Investment advice and portfolio management is provided by registered investment advisors and (albeit with controversy) by many brokers and their registered representatives. The provision of insurance advice is largely regulated by the states. Estate planning is provided primarily by attorneys, but certain advice relating to it is provided by CPAs and life insurance brokers/agents. Advice in other areas of financial planning is already be subject to government regulation and oversight.
Yet, financial planning brings all of the foregoing areas, and many more, together for a client at different stages of their life. It focuses planning on the delineation and accomplishment of a client’s lifetime goals. The advice provided by personal financial planners extends well beyond budgeting, cash flows, insurance, employee benefits, and investments. “Life planning” or “life coaching” can involve changes to behaviors regarding money, career advice, and – ultimately – the pursuit of happiness.
The integration of those advice areas results “connects the dots” between discrete areas of planning and provides value by ensuring gaps and conflicting advice in planning are avoided.
The uniqueness of the body of knowledge is now reflected in various university degree programs that offer undergraduate and graduate degrees in personal financial planning, and in certain certificate programs that provide a specialized course of study that supplements a four-year college degree. The profession’s unique body of knowledge is also reflected in the “principal knowledge topics” that serve as a blueprint for the CFP® certification exam, as well as by the AICPA’s CPA/PFS body of knowledge or the Chartered Financial Consultant® course requirements. Other designations come close to providing the necessary depth and breadth of knowledge for financial planning. For example, the CFA Institute’s CFA® candidate body of knowledge (CBOK) provides breadth of coverage of financial planning areas, though its CBOK remains dominated by economic, investment and portfolio analysis topics.
Financial planning is a unique body of knowledge. It is not wholly distinct from other, discrete areas of knowledge that are subject to regulation. But, through the breadth and depth of the knowledge required of a financial planner, and the skills required to be an empathetic listener, a financial counselor and a life coach, financial planning possesses the requisite “uniqueness” to qualify as a profession.