Leading financial planning commentator Michael Kitces came down hard on the American CFP Board Tuesday suggesting it’s watering down the experience requirements putting the integrity of the CFP marks in jeopardy.
“The change to the experience requirement should help the CFP Board to continue to grow the ranks of CFP certificants, as its Board of Directors has increasingly emphasized the importance of growth in recent years,” Kitces wrote Tuesday in a blog post on Nerd’s Eye View. “Yet at the same time, it’s more than a little ironic that the CFP Board has spent the past 4 years – and over $40M of CFP certificant dues – funding a public awareness campaign to hold out the CFP marks as the ‘gold standard’ in financial planning, even as it dramatically diminishes the strength of the experience requirement necessary to earn the marks in the first place.”
On Wednesday the FPSC confirmed that Canada’s requirements remain three years of financial planning experience.
“Financial Planning Standards Council has not changed its work experience requirements. Specifically, the experience requirement for CFP certification in Canada is 3 years and must be gained through financial planning-related employment or self-employment,” said Joan Yudelson, FPSC’s Vice President, Professional Practice. “The experience helps candidates apply their financial planning knowledge in a real life business setting and further develop their professional skills and judgment in meeting clients’ goals and needs. Teaching financial planning courses at a post-secondary level may qualify for 2 years of work experience.”
What’s alarming to Kitces is the fact the CFP Board now considers virtually any job related to financial services a qualifier for the CFP experience requirements. Up until 2012, a CFP candidate needed three years of financial planning experience; that’s been reduced to two years of financial planning experience or three years in almost any job related to financial services. Under the new rules that went into effect July 1, even financial journalists qualify.
Perhaps even more problematic is the lack of consultation current financial planners were accorded in making the latest changes.
“Given the significance of the rule change, it’s hard to understand why the CFP Board would not
honor its own historical precedents of putting such significant proposals out to stakeholders for comment… unless the CFP Board already anticipated the change wouldn’t be supported and didn’t want to invite the criticism,” Kitces wrote. “It’s also notable that even the CFP Board’s announcement of
the proposal was released in a manner that would minimize its visibility and make it harder to mount objections – delivered as a press release on December 30th
, during the notoriously slow news cycle between Christmas Day and New Year’s Day, when hardly any reporters were around to cover it, and few CFP stakeholders were around to read it!”