Jamie Hopkins: What the CFP Mark Really Means Now

By John Manganaro

Q&A August 17, 2023 at 08:00 AM

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Amid the battle for talent that is unfolding in the advisory industry, there is a clear focus on securing financial planning professionals who have earned the certified financial planner designation, and according to Carson Group managing partner Jamie Hopkins, that focus is unlikely to abate in the years ahead.

In fact, Hopkins sees evidence that the CFP marks will only become more important in the future as more clients demand a true financial planning experience — one that goes beyond mere discussions of the portfolio to factor in questions about lifestyle, risk tolerance, legacy giving and many other areas.

What's more, Hopkins and others hope the CFP marks and other designation programs can be an important part of the industry's effort to tackle its longstanding and stubborn diversity problem, wherein Black and Hispanic Americans continue to be significantly underrepresented in the ranks of the financial services profession.

Ultimately, as Hopkins argues in the Q&A dialog below, the CFP certification process remains a powerful way for advisors to show they can deliver a planning-first experience that is based on the latest research and proven best practices — and on their clients' best interests.

With the CFP Board currently undergoing its first-ever competency standards review, Hopkins says now is an important time for the CFP marks, and he hopes any changes to the program will help to expand the opportunity for qualified professionals to pursue the marks.

THINKADVISOR: It is obvious why a single planning professional would want to go through a program like the CFP and to have this certification to show their clients. But, anecdotally, we are seeing a more concerted effort by firms to establish CFP talent — whether they recruit it or train it at home.

What do you think about this topic?

JAMIE HOPKINS: There's a lot to say here, and so maybe some of my personal background will help to set the stage, as will some background about Carson Group.

To begin with, I think credentials for advisors are important in general. Most credentials add a layer of credibility, and it adds a layer of trust between the end client and the advisor. As you know, in some ways, this is really a trust business, so any way that you can raise that trust factor is going to generally be a good thing.

I would say that the CFP designation is the most well-known mark in the world of financial planning today, but you have other designations as well that are important, including MBAs, JDs, [chartered financial analysts] and [certified public accountants], for example.

Here at Carson Group, we took the stance three or four years ago that, if we have a W-2 advisor on our staff, we require them to either come in with the CFP marks or an equivalent, or to get it within five years of joining the firm.

So, we've really put a lot of effort into this. Last year, we had 35 or so people going through the CFP coursework here, and we paid for that. In addition to the actual coursework, I was running monthly educational training sessions, too, and that was a lot of fun. We have a second group that just started their training earlier this summer in June, so we've built a little bit of a CFP study group learning ecosystem here at Carson.

Why are we doing this? It's because we are a planning-first firm, and that is how we want to be seen in the marketplace. So, the CFP mark creates a good baseline for our advisors.

You have said that you see the CFP mark more as a baseline for great planning than the gold standard. Can you expand on that?

Yeah, and this is a point where the folks at the CFP Board and others might push back on my comments, but I actually view the CFP marks as the baseline for a planning professional, rather than the gold standard.

Earning the CFP is not the only way to learn the planning skillset, either. For example, I spent a lot of time teaching planning at the American College of Financial Services, and I was never a one-designation guy. For example, I view the chartered financial consultant designation as being a real CFP equivalent. It's much of the same course work.

One important difference is that the ChFC, though, doesn't require a four-year college degree, whereas the CFP does. This is important because, if we want a more diverse advisor community, that four-year degree requirement is a hurdle.

That's something that has come up in our conversations with the leadership at the CFP Board. They seem to be aware that this is an issue, so we'll see what comes out of their review of the competency standards.

Do you think they will drop the four-year degree requirement?

It's hard to say. I've spoken about this, and it's one reason why I respect the ChFC standard. You can get it without a four-year degree.

Notably, it was not always required that CFP candidates have a four-year degree, and in fact, if you look at 15 or 20 of the most famous and successful CFPs from the last 30 years, I'd bet half of them don't have a four-year college degree.

My personal take is that I could get behind maybe reducing this to a two-year associate degree requirement. If you think about it, those last two years at college, that's when you are pursuing your major and that more specialized learning.

In this sense, the CFP coursework and the final exam are really like earning your major. So, I think a two-year degree requirement could be a happy middle ground. I think that approach could work well, personally.

As I have noted, we treat JDs, CPAs, ChFCs and CFPs as all kind of being on the same playing field, with some nuances. Obviously, it's harder to get the law degree than it is to get the CFP, and I would argue it's also harder to get the CPA. Nonetheless, all of these marks show a commitment to education and a high trust standard for end clients.

Would you say that the MBA has lost some of its luster in the financial planning world?

Yeah, I probably would. Sadly, the MBA has lost some luster, in part due to the proliferation of virtual business schools and the emergence of non-regulated business schools offering MBAs.

For example, I personally have an MBA from Villanova, but I don't really recommend this as a career path to most people anymore. If your company is going to pay for it, and you can do it while you're working, that's still a good opportunity.

I would also say that, among the client base we are prone to serve, people do still know and respect what an MBA is, and it especially gives you a leg up when you are working with business-owner clients.

So, it's not like MBAs aren't important anymore. Remember, if you're going to be a financial planner, probably half of your clients are going to be entrepreneurs, and they will like that you have the understanding of how businesses work and operate.

That said, I think you should still get a CFP if you only have an MBA and you want to be a real financial planner.

What do you think the future holds for the CFP marks and for CFP professionals?

I expect the CFP program will continue to grow, but I think we should be pushing the other strong specialty marks forward as well. For example, I was a co-creator of the retirement income certified professional designation, or the RICP, and I think that program has a great future.

The RICP has been the fastest growing certification in the market in recent years, and that's not surprising given where the industry is at today. There is just so much demand for skilled income planners.

We actually built the RICP to be a CFP-plus curriculum, and we even had interim discussions at the beginning about whether we should require the ChFC or CFP before you could take the course.

Ultimately we decided against that, because we thought it would limit our reach, but we still believe the RICP is an even deeper planning designation than the CFP alone. I think and hope all of these marks will continue to grow as the industry shifts its focus towards financial planning.

It was interesting to see that the CFP Board recently went through a structural reorganization to allow them to do more advertising and promotion about the financial planning profession. Will that be useful, do you think?

Yes, I think it will be helpful. I think people search out CFPs more than they ever have before, and that will continue.

It doesn't mean that CFPs are always your lead advisor, though. The way we structure our teams is that we definitely want CFPs on board, but they aren't always the leader.

Sometimes there are other great advisors with other skillsets who take the lead. They might be more of an attorney or legal expert, or they could be a real investment market expert, or maybe they are really good at meeting and bringing in clients — whatever it is.

But, I do think that the planning-first mindset means a CFP has to be part of a good financial advisory team offering.

Can you speak more about how the industry can tackle its diversity problem?

Yes, and I would start by point out that, probably one of my single favorite things I have been a part of over the last three or four years is launching the FinServ Foundation, which is a nonprofit dedicated to helping address the industry's diversity challenge, among other goals.

We now work with 32 colleges and universities that have dedicated financial planning programs.

The problem we are trying to solve is that these financial planning programs are popping up, and they are teaching students and helping them enter the CFP program. There is still this challenge, though, that underrepresented groups who are trying to become advisors aren't staying in the profession. That's why we have been stuck at the current level of representation for 20 or 30 years.

If you go and look at these schools, there is really strong diversity in these programs. So, what's the disconnect?

We are trying to really understand this problem, and what we have seen is that it's really an access and an opportunity problem. If you don't have a built-in network of people in your family or your circle of friends, it's hard to break into the top planning firms.

Instead, you often see these young people end up at insurance firms or brokerages, for example, and they end up losing interest because that's not what they wanted to do. They wanted to do financial planning.

So, we are dedicated to providing coaching, mentorship and then, critically, access. Right now we have over 200 students that are participating in the FinServ program. It's two years of coaching and mentorship that starts during their senior year but then keeps going the year after they graduate.

We organized it this way because you have a lot of support when you're in school, but then you are just sent out into the world when you graduate. If you don't have that natural network, it's so hard to break in, and this is where the structured mentorship program plays a big role, as well. It's going to take a strong and concerted intervention like this to make a difference.

One really cool thing we do is bring students to the big industry conferences. We pay for airfare, hotels and meals, so it's really a true opportunity for these people to start to create that network and become a part of the planning community.

The bottom line is that we have to make sure that we end up with a more diverse CFP and advisor world that is more representative of our country long term. I can't do that alone. Carson Group can't. FinServ can't. The CFP Board can't do it alone, either. We need a collective group to get here. It's too big of a problem for anyone to think that they can solve it alone.

What else can firms do to help improve the diversity of the CFP talent and staff in general?

We need to see more firms out there with development programs that help facilitate these CFPs to stay in the profession. That's something we've launched here at Carson Group. We have a two-year program where we bring in new CFPs to work as W2 staff advisors. They are salaried, and they aren't selling.

It's been wonderful to see the retention. We haven't lost a single person in this program, compared with a really high attrition rate across the industry in that first two-year period.

We are recognizing that the old sink-or-swim mentality is not going to change this problem. I believe the W2 approach is crucial for the beginning of these people's careers.

What I can also tell you is that we have some of these folks who now want to move from the W2 to an advisor compensation model that is more of a traditional payout approach. They're in a great position now, but I don't think that model would have worked even for these successful advisors at the very start.

You have to spend time planning and learning with clients. I think that's where this whole industry has to get to. It's going to be hard, because we've built a business model that hasn't traditionally supported this approach.

Pictured: Jamie Hopkins