The new head of the Certified Financial Planners Board of Standards says there's no specific shortcoming that's prompting the organization, which oversees the most widely-used financial planning credential, to take a fresh look at its competency benchmarks for some 95,000 advisors.
Rather, it's the simple fact that the standards for professional planners haven't undergone a comprehensive review since being adopted nearly 20 years ago. With Dan Moisand taking over as board chair on Jan. 1, one of his priorities is to oversee a take-the-pulse audit that the non-profit standard-setting organization announced late last year.
Moisand said it's hard to say what might change, if anything, as a result of this review. For one, he said, the appraisal will cast a very wide net.
"Our competency standards have changed over time," Moisand said. "Twenty years ago, you didn't need a bachelor's degree. We've also added our apprenticeship programs. But we've never had a comprehensive review of the whole package and competency standards. So it's past time for that."
The CFP's mission is to make its certification for advisors the gold standard of the industry and to establish and enforce a set of standards that make financial planning a profession akin to law or medicine. The organization allows advisors to hold themselves to the public as certified financial planners only after they've met a series of requirements. For instance, they must have 6,000 hours of professional experience or 4,000 hours of apprenticeship experience. They must pass an exam. And they must stay atop the industry's latest developments by acquiring continuing-education credits.
Moisand won't be conducting the reviews himself. That task will instead fall to a panel that will be appointed later this year.
From 1999 to 2001, Moisand served on the organization's board of practice standards, helping to set competency and education requirements for planners. He has also worked closely with related organizations like the Financial Planning Association, where he served as president in 2006, and the Foundation for Financial Planning, where he was a trustee from 2014 to 2019.
Moisand recently sat down with Financial Planning to talk about his hopes and goals for the CFP's coming review. (This interview has been edited for clarity and brevity.)
Financial Planning: When do you think the members of the Competency Standards Commission will be named and who's likely to end up serving on it?
Moisand: I would anticipate in the first of the year, as certain as I can be with stuff like that. It's going to be a wide variety of folks. It's going to be people with a high level of expertise in certification, academics, practitioners, etc. A very broad group,
Financial Planning: How long do you think they'll take to do their work?
Moisand: Part of me wants them to work fast, and part of me wants them not to. So it will take as long as it needs to for them to do it well. But I certainly wouldn't anticipate that they'd be done in '23. 2024 might even be a stretch. It's a colossal project.
Financial Planning: What are you specifically looking at?
Moisand: It's the education, exam and experience criteria. The exam is probably the least concerning, because there has always been an ongoing process of reassessing what needs to be on the exam. And there's a science to creating certification exams.
The other two are where there is more mystery. With the education requirement, there's the education that's required to sit for the exam and the education that's required after you've been certified, to maintain your certification. And then there is experience required.
Literally everything is on the table. When you talk about continuing-education requirements, is the number of hours that are required good? Are we doing all we can to make sure the quality of hours is good? What can we do to improve that? On different subjects — how about retesting? Should we be doing that? If so, when? What does that look like? I don't know if we're going to go there or not. But that's why we formed a commission to ask these questions and burrow deep.
Financial Planning: What will this review mean for the industry's efforts to become more diverse?
Moisand: Well, increasing the number and diversity of CFP professionals is one of our five strategic priorities. No. 1 is our standards-setting and certification process. That's the core of what we do. But increasing the number of CFP professionals and their diversity has long been and continues to be a very high priority. And the competency commission's work can impact that. If you raise the bar, it makes it more difficult for people to acquire the right to use those CFP marks.
But if that's what needs to happen for the public, if that's the appropriate level to set the standard, that's how it's got to be. And we're going to amp up efforts to increase diversity in other ways.
Financial Planning: How can you do that?
Moisand: Well, we're already doing it. We started doing it back in 2015-ish with the creation of the
Financial Planning: What other priorities have you got for this year?
Moisand: A big one is we want to develop a sustainable financial planner workforce. You can pick up any kind of industry publication and regularly see articles about talent shortages. This is another long play, because you've got to get the attention of career changers and young people.
Financial Planning: How do you do that?
Moisand: It's partly building awareness of what the profession actually entails. So we did some focus groups in 2022 that were composed of high school-age kids and their moms. And we asked what they thought of the possibility of working in financial planning. A lot of them had misconceptions about what financial planning entails. They thought it was sales-oriented. But when we asked them to describe the qualities of an attractive career, they started describing the elements that go into a financial planning career. You get to help people. You have flexible hours. You can make a good living. You can be intellectually challenged. So we still have some barriers to overcome.
Financial Planning: What do you think of the Financial Planning Association's plan to seek some sort of federally legislated "title protection" for financial planners — a designation that will distinguish them legally from other financial professionals?
Moisand: It's not that I or the board are per se against it. But this has been looked at a lot over the years. And I would, we, have some concerns because we don't want to do anything to devalue the CFP marks or the control of that process.
And part of it is the legislative process. Having a good rule is not necessarily the problem. Getting it in untouched (by a legislature) is the problem. And getting it to stay untouched is challenging — which is one reason that, before I was on the CFP board, several years ago they came out saying the board was wholeheartedly against a state-by-state approach to this. Because once you get something like this through a state legislature, you've got to defend it at the state level. And then it's a morass.
In the meantime, we are going to stick to our knitting. We are continuing to do all that we can to make the CFP marks valuable so that when people are out there seeking financial planning services, they are going to seek out a CFP professional first and foremost.
