Why can’t we be friends? Part 2 in an 6 part series

It was in 1975 during my enlistment with the U.S. Air Force that I first heard the song “Why Can’t We Be Friends?” by the American Funk band War. The song was the title track of an album, which bore the same name. This song, like many by the band, was socio-political in nature and addressed the senseless animosity between races in the United States. Also, NASA played this song was played during the linking of U.S. astronauts and Soviet cosmonauts for the Apollo–Soyuz Test Project.

I would like for all of the various financial planning credentialing entities to hold hands and sing: “Why can’t we be friends?” The needless bickering and infighting is senseless, without purpose, and detracts from the profession. All of this ‘chest thumping’ about ‘my credential is better than your credential’ is a waste of their membership’s valuable resources (dues).Here are some numbers to ponder: according to an analysis of the 2007 Survey of Consumer Finances about 22 percent of U.S. households used a financial planner for investment and saving decisions. That is “a lot” of households, 115,226,802 to be exact. Yet, according to the U.S. Bureau of Labor Statistics, the number of financial planners in the United States is approximately 208,400. A quick review of the math shows this is quite a few households per planner—more than enough to go around. From a biblical perspective, “the fields are white unto the harvest.” So what is with all of the squabbling? “Why Can’t We Be Friends?”

What are the primary financial planning credentials? This is an easy question to answer: CPA/PFS, CFP® and ChFC. All have been around for about the same period of time, all have the same basic body of knowledge which must be mastered, and almost all of the states waive the requirement for Uniform Investment Adviser Law Examination (Series 65) if an adviser holds one of these credentials. “Why Can’t We Be Friends?”

Education, “Ay, there’s the rub.” The Chartered Financial Consultant® (ChFC) designation, awarded by the American College does not require a bachelor’s degree. The CFP® certification, granted by the CFP Board only recently began requiring a bachelor’s degree (2007). Additionally, for the CFP® certification, candidates have up to five years from the date they pass the CFP® Certification Examination to satisfy the bachelor’s degree requirements. AICPA’s Personal Financial Specialist (CPA/PFS) designation has always required a Bachelor’s degree because a CPA must possess a Bachelor’s degree.

I believe for an individual to hold himself or herself out, as a financial planner a Bachelor’s degree should be the bare minimum educational requirement. After all, we are talking about an individual’s financial future. For our firm, a Master’s degree is the minimum requirement, in addition to seven years’ experience, and holding the CPA / PFS credential or the CFP® designation. But more on this later.

Please join my webcast, Personal Financial Planning: Regulations, Updates, Future of the Profession on Friday, February 28 at 1:30 PM EST. This Webcast will review the history of Financial Planning and the Investment Adviser’s Act of 1940. Additional topics to be discussed are the regulation of Financial Advisers and the three main organizations which provide certification for Personal Financial Planning. The presentation is web based and virtual seating is limited. The course is approved for one hour of CPE and CE. For more information or to register, please email hello@ttillery.com.

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