The battle for the CFP designation

The Certified Financial Planner designation is about to undergo one of the biggest changes in its 23 year history. Stuart Engel reports on the struggle to wrestle the CFP mark from its US owners.

As you are reading this article, there is a coup developing among the top brass at the International CFP Council. A group of some of the top financial planning minds from 14 countries is attempting to wrestle control of the Certified Financial Planner designation from the US.

But this is a bloodless coup. Far from opposing the move, the US-based Certified Financial Planner Board of Studies, who controls the CFP mark at present, is a supporter of the coup.

The aim of the coup is not so much to wrestle the designation away from the US, but to give it a truly international flavour. One proposal is to base the international body at a diplomatic capital in Europe such as Brussels but other cities are also being considered.

Australia has been at the frontline in the battle for a truly international CFP for the past two years. Firstly through 1999 Financial Planning Association chairman Wes McMaster as Australia's representative on the international council in 2000. McMaster will pass the baton to outgoing FPA chairman Ray Griffin when he steps down this week.

Australia was also the first country outside the US to adopt the CFP designation when Gwen Fletcher negotiated a deal with the CFP Board of Studies on behalf of the FPA about a decade ago.

Twelve other countries have since joined the international CFP movement including France, Switzerland, Germany, Japan, Canada, Singapore, South Africa, New Zealand and the UK. A number of other countries have also expressed an interest in joining the association.

A growing perception among some member countries, particularly the European members, is that the CFP is an American, rather than international, mark. A few months ago, a Dutch group set up an alternative designation, called the European Financial Planner (EFP), which aims to capitalise on this perception.

So the member countries have put together a committee to formulate a plan for a new international governing body for the CFP. The first building blocks have been put in place by setting up a business plan for its governance, structure and finance. One of the chief architects of this plan was Wes McMaster in his capacity as chairman of the finance committee for the CFP Council.

The finance committee drew up an independent set of accounts for the proposed body and set up reporting principles.

"It can now behave as an independent organisation," McMaster says.

"The CFP Board of Studies is happy to have control of the council in external hands because it realises that the value of the CFP designation will increase as its global reach extends into other countries."

McMaster says the group now only needs a full-time leader and its own staff before it is a viable operation.

The only thing standing in the way of a truly international CFP council is to convince the CFP Board of Studies that an independent body is viable, both financially and operationally. Keynote speaker at last year's international CFP conference in Sydney, Patti Houlihan, now heads up the CFP Board of Studies and is understood to be a supporter of a new body.

Australia's new representative on the International CFP Council, Ray Griffin, says the CFP Board of Studies is expected to consider a full proposal for the independent international council towards the middle of next year. A team has been put together to put that proposal together of which Griffin is a key player.

"The taskforce will set up the blueprint for the CFP mark to grow around the world," Griffin says.

"If it is accepted by the CFP Board of Studies, it might then take about two years to implement that blueprint. But if it does go ahead, it will give the designation a new lease of life."

BREAK-OUT STORY

Meanwhile back in Australia

In 1998, the Financial Planning Association (FPA) set 2003 as the date by which all practitioner members of the FPA must be Certified Financial Planners (CFPs).

The Association's 3,600 practitioner members have responded quickly to the challenge. More than 60 per cent of FPA practitioner members already hold the designation while a good proportion of those who have not are undertaking the educational program or fulfilling their experience requirements.

The FPA claims the CFP is more rigorous than the competing specialisations offered by CPA Australia and ICAA and that it is Australia's only global financial planning designation.

As its elite designation, the FPA plans to position the CFP at the post-graduate market. The CFP credential means that financial planners who are certified have voluntarily agreed to adhere to standards of competence and ethical practice established by each organisational member of the International CFP Council.

The FPA has ten approved tertiary university programs (including the FPA's own Diploma of Financial Planning) as entry to the CFP Professional Education Program.

The program comprises four core units of post-graduate study covering compliance, ethics and professionalism, practice management and comprehensive financial planning strategy development. Advanced standing candidates are also required to complete a special bridging unit on the process of financial planning.

Accountants were provided a limited window of opportunity to qualify for CFP, which expired in July. Accountants could qualify for CFP by completing DFP8 or CFP B plus a practice knowledge exam. Applicants for CFP also require three years approved practitioner experience. More than 1000 accountants took this opportunity.

Australia's Financial Planning Association (FPA) estimates there are 15,000 financial planners operating in Australia. FPA membership has grown an average 20 per cent each year over the past four years. The FPA believes this reflects the wider industry growth.

Simon Segal