Planned Category of Finance Planners Draws Fire

Local certified financial planners are leading a fight against a proposed new designation that they say will confuse consumers and dilute their professional trademark.

The new designation, Associate CFP, would be given to planners who meet basic education requirements and pass a test administered by the Certified Financial Planner Board of Standards, a private regulatory organization that controls the CFP trademark and that is proposing the change.

The requirements are far short of those needed to obtain the regular CFP, which include college-level courses covering more than 100 financial planning topics, a 10-hour test and three years of experience.

The move is part of the planned merger between the Institute of Certified Financial Planners, a trade group that represents 15,000 CFPs, and the International Assn. for Financial Planning, which includes 19,000 brokers and others who may not have the CFP designation. The merged organization, to be called the Financial Planning Assn., is scheduled to be launched in January.

Proponents say the new designation is necessary to expand the board’s influence over a burgeoning profession that has no comprehensive legal or ethical standards.

“There are 10 times as many people out there who are doing planning and getting paid for it who don’t subscribe to CFP ethics and to CFP standards and practices,� said Lynn Hopewell, a leading certified financial planner in Fairfax, Va., and a former member of the board of standards. “If we get them in the tent, we can corral them and get them behaving in better ways.�

Opponents, including members of a Los Angeles financial planning group and a major consumer advocate, dismiss the new designation as “CFP Lite� and say it will allow unqualified planners to deceive the public.

“Many of us feel that this is simply giving tens of thousands of . . . salespeople in financial planners’ clothing the appearance of meeting equivalent standards to that of the certified financial planner,� said Eric D. Bruck, a Culver City CFP.

Nigel B. Taylor, president of the Los Angeles Society of the Institute of Certified Financial Planners, has been urging fellow planners to fight the change since May, after discovering the board had trademarked the “Associate CFP� name.

Taylor believes that the controversy underscores a need for state legislatures to legally define and regulate the profession of financial planning, a move opposed by insurance and brokerage groups and by many planners.

“We need a high level of competency as a minimum standard for entry into the field of financial planning, and we ultimately need a properly defined profession incorporated into the business and professions code,� Taylor said.

The Consumer Federation of America, a Washington-based consumer advocacy group, has expressed reservations about the new designation.

“Could you imagine the bar association saying that if you took a one-semester course and pass the final, you could call yourself an associate lawyer?� said Barbara Roper, the federation’s director of investor protection.

The uproar persuaded the two trade organizations to announce this week that they would poll members about the proposed designation.