The financial planning profession is rapidly expanding in many directions. The complexities of managing one's money in the modern marketplace have led to a mushrooming demand for financial education and advice that shows no sign of slowing, and many consumers look for the CFP® designation when they choose their advisor. This credential stands as proof that the advisor has met rigorous academic and ethical requirements and has the necessary expertise to help clients meet their financial goals.

The Way It Was
For much of the 20th century, investors who needed financial products and advice were serviced by bankers, stockbrokers, insurance agents and accountants. Most of the sophisticated products and services that existed then were available only to wealthy clients, and the lower and middle classes were left with a choice of individual stocks, bonds, cash value life insurance, and CDS and savings accounts as investment vehicles.

There was also little or no coordination among professionals regarding the proper integration of insurance, investment and income taxes, and the financial industry was almost completely driven by sales. Many financial professionals simply hawked their specific product or service irrespective of the actual needs or circumstances of the consumer, and the concept of unbiased financial advice or education was unheard of.

Financial regulatory authorities at that time focused chiefly on outright fraud and wrongdoing within a given field, such as embezzlement or direct manipulation of the price of a security. The only real ethical criteria that most retail advisors had to meet at that time was a suitability standard, which merely required that a given transaction or investment had to be suitable for the customer. But this rule failed to protect customers from indirect negative repercussions that could result from many of these transactions, such as the unnecessary taxation of a transaction that could have been avoided if it had been structured differently. A higher standard of practice in the industry was clearly needed.

Birth of a Profession
The financial planning profession as we know it today was spawned just prior to one of one of the worst bear markets in U.S. history. A group of 13 financial professionals gathered in Chicago on Dec. 12, 1969, to discuss the growing public need for comprehensive, unbiased advice and planning that encompassed all areas of personal finance. This meeting led to the creation of the International Association of Financial Planners (IAFP) and the College for Financial Planning in Denver.

Three years later, the first group of students enrolled at the college to study the newly-created curriculum for the CFP certification. This group of graduates then formed the Institute of Certified Financial Planners in 1973. The college went on to produce a new graduating class of CFP® certificants each year, but as time went on it became apparent that the college was not able to function effectively as a governing body for the designation.

The Certified Financial Planner Board of Standards was created in 1985, in order to fulfill this function, and now retains governing and issuing authority over the mark and its certificants. In 2008, the board significantly upgraded its Standards of Professional Conduct and mandated that all certificants meet the fiduciary standard of responsibility in their practices.

Benefits of the CFP® Mark
Financial advisors who carry the CFP® credential today can expect to receive continual endorsements from the major news outlets. The financial media has encouraged consumers to seek out assistance from CFP® practitioners for the past several years, and the CFP® Board has also launched a full-scale multimedia public awareness campaign designed to promote the designation to the public at large.

The CFP® mark is the only financial credential that enjoys trademark protection and requires its certificants to adhere to a fiduciary code of ethics. This distinction provides tangible reassurance to clients that an advisor who carries this mark is required to act in their best interests at all times. The educational and experience requirements of the CFP® mark have also translated into a more satisfied clientele. A poll conducted by the CFP Board revealed that 87% of clients who hire CFP® certificants for advisors are very satisfied with their planners, compared to only 72% of those who hired advisors without this mark. The validity of the CFP® mark was even upheld by a Supreme Court decision in 1994 that forced a state board of accountancy to allow one of its members to advertise this mark after she earned it.

Carrying the CFP® mark can also provide more practical benefits for many advisors. Certificants have access to a marketing toolkit that is available on the CFP® Board website. This kit contains a wealth of resources including publications from the CFP® Board, a social media guide and a separate toolkit for their public awareness campaign that includes TV, print and banner ads, sample client letters and the results of the 2012 Household Financial Planning Survey.

The CFP® Board has also published statistics indicating that CFP® certificants earn up to 40% more than their non-credentialed counterparts. In fact, a 2008 survey revealed that the average annual earnings for those who either work for large firms or have their own practices typically ranged from $110,000 to $160,000.

There are also a number of states that exempt Investment Advisor Representatives (IARs) from having to register as such at the state level if their CFP® credentials are in good standing. This exemption can save advisors the hassle and expense of obtaining a Series 65 license in order to do business in that state.

The Bottom Line
The majority of American families and individuals do not have any type of comprehensive financial plan. The increasing demand for unbiased and competent advice in this area represents an enormous opportunity for those who carry the CFP® mark, as they are typically able to provide a level of professionalism that is difficult for their competition to duplicate. Although it is not the only respected financial planning credential in the industry, it is perhaps the most widely recognized by the media. For more information on how the CFP® credential can help you further your career, visit the CFP® Board website.

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