4 Reasons to Fight for Financial Planners' Legal Recognition

I believe financial planning is a profession. Compared to medicine, law, and accounting, ours is a young profession but a profession nonetheless. And while those calling themselves physicians, attorneys, or accountants can do so because of the competency and ethical standards they must meet, the same is not currently in place for those calling themselves "financial planners."

This is a profound challenge for the thousands of professionals who devotedly provide their clients with comprehensive financial planning guidance based on minimum standards of competency and ethics. But it's a problem that can be — and should be — remedied.

Over the past several years, many professionals and industry organizations have debated the merits of protecting the title "financial planner" through legislative action. While everyone is entitled to advocate for or against those policies they deem worthy of such action, I firmly believe this is an endeavor worth pursuing.

It is an objective for which the rest of the Financial Planning Association (FPA) Board of Directors and I have such conviction, that we have unreservedly decided to make it the primary advocacy objective of the Association in the months and years ahead.

For years, we have heard from our members, chapters, and volunteer leaders that they want title protection for the term "financial planner." A recent advocacy survey FPA conducted revealed that 78% of FPA members support title protection. As the leading membership organization and trade association for professionals engaged in the financial planning process, we owe it to our members to enthusiastically pursue this objective.

FPA will pursue this goal because we believe the legal recognition of the term "financial planner" through title protection is an acknowledgment that anyone proclaiming to be a financial planner meets minimum standards that protect consumers and advances the financial planning profession.

The push for title protection is a substantial advocacy issue that may require allocating resources and many years of planning and effort to realize. But FPA is ready to lead this push.

Why Title Protection Matters

There are four central reasons for this steadfast commitment to the legal recognition of "financial planner" through title protection.

First, title protection will distinguish financial planners from other financial service providers. Leaving the term "financial planner" undefined by policymakers means some can take liberties with the title — even if they are not providing financial planning services, which is misleading to consumers. In 2013, Cerulli Associates conducted research showing that only 38% of self-identified financial planners actually provided financial planning services. This has to change.

Second, title protection will establish minimum standards for financial planners without creating an unnecessary regulatory burden for those meeting the standards. Anyone proclaiming to be a financial planner must meet the necessary competency and ethical standards to ensure consumers receive qualified financial planning services that are in their best interest.

Third, financial health is paramount to everyone's well-being, equal to physical and mental health. Title protection will enable consumers to identify and engage with a qualified financial planner for holistic, comprehensive financial planning services, with the confidence that their financial health is the focus of that relationship.

It is estimated that $84.4 trillion will be transferred over the next two decades, according to Cerulli Associates. Those involved in this transfer of wealth deserve to receive financial planning guidance from those qualified to provide it.

Fourth, financial planning is an honorable but young profession, essential to the well-being of consumers. However, it has yet to achieve the same level of recognition as other honorable professions, including medicine, law, and accounting.

Financial planners will join those ranks through the legal recognition of the title "financial planner," a critical step in recognizing financial planning as a distinct, essential profession dedicated to the betterment of society.

'A Bold Vision'

Make no mistake about it. This is a bold vision for an emerging financial planning profession's future, but it is possible if we are willing to commit the time, energy, and resources to bring it to fruition.

In the coming months, FPA will engage stakeholders in robust discussions as we explore the many potential strategies we may employ in this effort, including the minimum standards for anyone claiming to be a "financial planner."

We are ready to lead this journey and look forward to welcoming those professionals and organizations who want to join us in this endeavor. Because, like us, they know the legal recognition of financial planners through title protection is right for consumers and the profession.

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Dennis J. Moore, MBA, CFP, is volunteer president of the Financial Planning Association and director of wealth management operations with Mercer Advisors in Dallas.