Universal Standards

"Populations are aging around the world, and governments can't live up to their guarantees of retirement income," says Lefferts. If you think the U.S. Social Security system is in trouble, you should see some of the other ones that are actuarially bankrupt."

The result is that governments are doing things like shrinking pensions and introducing means-testing for benefits. People are beginning to realize that they will have greater personal responsibility for their financial security. This has led to the introduction of financial products and a delivery system, but with some negative consequences notes Lefferts.

"At the beginning, the products are easily manipulated by people who are dealing with inexperienced customers," he says. "Then what follows is the recognition that we need technical standards and ethical standards for the experts — the advisors."

In the U.S., this evolution is basically complete. The rest of the world is catching up quickly. "The CFP is furthest along in English-speaking countries, which isn't surprising because that is the language the standards were written in," said Maye. "But in the last few years we've brought in more countries; we now have 12 in Asia-Pacific and seven in Europe."

A story from FPA's Laura Brook shows how the forces work. "I remember being in Kuala Lumpur in 2002 at a conference," she recalls. "There was great enthusiasm for the idea of fee-based and fee-only planning. But every product in that country was commissioned. That will change, and a need for financial planners will rise."

As the need arises, regulators are finding the client-centric approach of the CFP model (on which ISO is built) to be attractive. "Over time, I expect to see conformity to the ISO standard for financial practitioners, through both voluntary and regulatory means," says Lefferts.

Ireland is a great example. Regulators are discussing with the FPSB whether a CFP certificant would automatically be considered to have achieved the country's licensing requirements for financial planners.

Just as importantly, consumers are demanding a global standard for advisors. "I was in Zurich last month, and I was talking to an advisor who works for a large institution," says Maye. "He had just added two clients who asked him if he was a CFP. They had been working with U.S.-based advisors who had the certification, and to them that was the seal of approval."

What Does It Mean?Finally, it's fair to ask what all of this means to an advisor who has an established U.S.-based business today? Is globalization of the industry an opportunity, a threat or merely irrelevant?

The first lesson is that advisors who have CFP certification have a leg up on the competition. For the highly skilled and trained advisor, international opportunities are on the rise. However, competition is on the rise, too, as advisors around the world are earning the same credentials and seeking an increasingly mobile and globalized group of clients.

I surveyed individual advisors about how they are affected by globalization. We'll find out what they said in my next installment.

—

Marie Swift is the president of Impact Communications, a marketing and communications firm for independent advisors; see www.impactcommunications.org.