Cary List - FPSC Stepping it Up - the new CFP Competency Profile
Transcript of Cary List - FPSC Stepping it Up - the new CFP Competency Profile
CIFPs Conference - June 11, 2007
Stepping It Up…the future of financial
planning, and other stories
CIFPs Conference - June 11, 2007
Today’s Agenda
Tenets of a Profession FPSC’s role Where are we today? The challenges What’s FPSC doing about it? The Competency Profile in Detail Where to from here?
CIFPs Conference - June 11, 2007
A Profession?
Is financial planning a profession? Why or why not?
CIFPs Conference - June 11, 2007
Tenets of a Profession
Requires high level of education High standards of conduct Generally accepted standards of
practice Clearly defined, unique set of
knowledge, skills and abilities with high standards of achievement
CIFPs Conference - June 11, 2007
More Tenets
Commitment to continuous learning
Prime purpose of rendering a public service – public accountability
Standards based on concerted opinion and force of organization
CIFPs Conference - June 11, 2007
A Profession in the MakingFPSC’s Mission
Benefit the public by leading the evolution of financial planning through the development, enforcement and promotion of the highest competency and ethical standards in financial planning as defined by CFP professionals
CIFPs Conference - June 11, 2007
A Profession in the MakingFPSC’s Purpose
Build and continuously define the financial planning profession through CFP certification, ensuring that it is a viable, sustainable and rewarding profession that serves the public interest
CIFPs Conference - June 11, 2007
Stepping it UpThe Result
Through our work (and the work of the professional community) we build trust in the profession and the CFP practitioner community
This in turn paves the way for CFP professionals to succeed
CIFPs Conference - June 11, 2007
A Profession in the MakingThe Result
Recent survey in the U.S. of CFP professionals listed obtaining CFP
certification as number three success factor.
First two factors spoke to subsidiaries of CFP certification – communications and trust
CIFPs Conference - June 11, 2007
FPSC’s VisionFor FPSC
The standards-setter for the profession Influential promoter of public interest Influential advocate for the profession Unique in our clearly defined role as the
professional regulatory authority for FP Influential promoter of the value of FP and of
CFP certification The organization that leads the way to a
strong and respected profession represented by CFP professionals
CIFPs Conference - June 11, 2007
Professional RecognitionJoint Responsibility
Whose responsibility is it? FPSC Your professional association YourselvesWe all have to do our part
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Tenets of a ProfessionThe Gaps
Cannot be seen as a marketing tool Must be recognized as serving public
good Must have uniformity and consistency
of service Must be perceived distinct value to
public
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A Profession?The facts - The Good News
2006 independent survey of CFP professionals tells us:CFP is most important pursuitCFP validates skillsCFP improves knowledgeCFP gives competitive advantage
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A Profession?Facts – More Good News
Consumer survey tells us:One in three adult Canadians know the
CFPCFP has the highest unaided awareness of
all FS designationsHigh levels of consumer satisfactionAssociated with positive attributes
o“Cares about me”o“is accessible”o“is in tune with my needs”
CIFPs Conference - June 11, 2007
A Profession?The Less Good News
Consumer PerceptionsVery strong association with “salesperson”Weak association with important
characteristics of a professionoConsistentoThoroughoUnbiasedoProfessional
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A Profession?More Not-so-Good News
25% of YOUR CLIENTS don’t know that you hold the CFP!
50% of those who do know don’t know what it means
CIFPs Conference - June 11, 2007
Financial Planning?
Poor understanding of what financial planning represents, and its public value
Case in point…
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Where are We Today?The Good
17,000 strong community High standards of entry Exceptionally high retention rate Growing awareness of financial planning
and of CFP as the profession’s standard No credible alternative professional
credential
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Where are We Today?More Not-so-Good
Still limited provision of comprehensive financial planning among the FP community – is this serving the public?
Very few consumers pay directlyMost Canadians don’t have a financial
plan Those that claim to have one didn’t use a
financial planner to design it!
CIFPs Conference - June 11, 2007
The Gaps –Who’s Going to Fix Them?
FPSC’s responsibilities CFP professionals’ responsibilities
CIFPs Conference - June 11, 2007
FPSC’s Role Revisited
Establish appropriate requirements for entry to the profession consistent (“inputs”)Rigorous ExaminationAppropriate experience requirementsAppropriate, relevant education
CIFPs Conference - June 11, 2007
FPSC’s Role
Establish and oversee standards that CFP professionals must meet (“outputs”)Standards of PracticeStandards of Ethical ConductStandards of Competent Performance
CIFPs Conference - June 11, 2007
The Work AheadFPSC’s Ongoing Mandate
Enforce all standards Require and enforce relevant CPD Continue to define the profession,
but through you Promote the value proposition
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The OutputsStandards for CFP Professionals
Ethical conduct Practice Competent performance
CIFPs Conference - June 11, 2007
Standards for the ProfessionEthical Conduct
Defined by Code of EthicsWell establishedWell definedWell adhered toRigorous systems in place to enforce
CIFPs Conference - June 11, 2007
Standards for the ProfessionStandards of Practice
Practice StandardsWell established?Well adhered to?Rigorous systems in place to enforce?
CIFPs Conference - June 11, 2007
Practice StandardsWhy are They So Important?
Clarify expectations between planner and client
Better-informed public Enhanced confidence in the
profession Establish consistency and uniformity Guidance for CFP professionals
CIFPs Conference - June 11, 2007
Practice StandardsReaction of the CFP Community
Generally embraced – recognition of benefits to the profession
Some see this as merely another “compliance” measureIf we are going to be recognized as a
profession, we need to overcome this attitude
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Practice StandardsImplementation Issues
Greatest concern from practitioners regarding Standard 100How do I write an Engagement Letter?What should it look like?I need further guidance“We already have enough compliance
burden”
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Practice StandardsFPSC’s response
FPSC guide to implementation of Standard 100 developedSeven scenariosSuggested phrasesDirect link:
http://cfp-ca.org/pdf/FPSC-Resource-for-Practice-Standard-100.pdf
CIFPs Conference - June 11, 2007
Practice Standards
Ongoing Implementation Challenges
CFP professionals not fully aware of obligations
Public not fully aware of expectations Not all organizations fully aligned
with planners Oversight challenges
CIFPs Conference - June 11, 2007
Practice StandardsOvercoming Challenges
Use all resources available to youWork with your organizationShare ideas with your peers – get involved in
your association and join or create a chapterFPSC will assist through ongoing guidance,
employer visits, etc. Understand the intent, scope and rationale
for the Practice StandardsAsk yourself – am I meeting my personal
obligations establishing the financial planning profession?
CIFPs Conference - June 11, 2007
Standards of CompetenceThe Missing Piece
While Practice Standards further define the process, they don’t address what exactly a financial planner should be able to do
Previous approaches to certification were based primarily on knowledge – what must a CFP professional “know”
CIFPs Conference - June 11, 2007
Knowledge Syllabus
Gaps
Students: “Why do I have to know that” CFPs: “Getting the designation did not
demonstrate my ability to perform financial planning.”
Employers: “We hire a CFP, who knows a lot, but we still have to teach them how to be a planner.”
The Public: “I don’t really understand exactly what a CFP professional can do for me.”
Internationally: “A CFP in Canada doesn’t mean the same as a CFP in Hong Kong/Australia/Japan”
CIFPs Conference - June 11, 2007
Competency AnalysisFPSC’s Competency Profile
PrinciplesContent built and validated by
practising CFP professionalsFuture-focusedDesigned to help drive the professionShould be “job neutral”Should be “knowledge-independent”
CIFPs Conference - June 11, 2007
Competency ProfileDefining the Profession
The ChallengeEstablish a cross-sectoral task force of
50 experts from across the countryCharge them with creating a one-page
document that defines the profession
CIFPs Conference - June 11, 2007
Competency ProfileDefining the Profession
Likely ResultA one page document that defines the
profession, signed by the chairA 49 page appendix made up of 49
separate one-page dissenting opinions
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Competency ProfileDefining the Profession
Next step – if we can get over that hurdle
Define the profession worldwide No small task!
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Competency ProfileGood News!
We Did It!
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Competency AnalysisPremise – CFP Professionals Defined
Provide wide range of financial strategies
Unique breadth of competencies Wide breadth of knowledge Work across multiple domains Unique ability to identify and analyze
inter-relationships among objectives – “integration” across multiple domains
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Competency AnalysisDistinction between CFP and Specialists
Specialists can provide expert advice within their areas of expertise
Only CFP professionals can identify and create appropriate strategies across all domains to match the client’s situation, circumstances and values
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Competency AnalysisFundamental Premise
Competencies built on definition of financial planning:“Process of creating strategies to
help clients manage their financial affairs to meet life goals”
The profile applies to the practice of financial planning – not product sales and not specialization.
CIFPs Conference - June 11, 2007
FPSC’s Competency AnalysisWhy the big deal?
Focus in FS industry shifting from “sales” to “advice” While CFP leads the way, potential competitors still
risk threatening CFP’s authority After 15 or more years, no clearly-defined profile
currently exists for professional financial planners Provides pre-emptive measure to ensure ISO is
complementary, rather than a threat, to the CFP Provides regulators with clear distinction between CFP
competencies and those of other financial advisors Can fit neatly into any regulatory or political agenda Can pave the way to professional self-regulation
CIFPs Conference - June 11, 2007
Competency-Based ApproachMore than knowledge, More than proficiency
“Competencies provide a description of the abilities that a CFP professional must possess and represent not just the tasks, but also incorporate the job-related skills, knowledge, attitudes and judgements required by members of the profession.”
CIFPs Conference - June 11, 2007
CompetenceMore than just knowledge
A competent professional must demonstrate the inherent characteristics of a professional, not just knowledge and skill
Knowledge, abilities and professional skills all contribute to competence
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Competency AnalysisProfile Overview
Key to CFP professionals’ uniqueness is that competencies must be drawn upon concurrently, even across multiple domains
CFP professionals must be able to wade through the confusion and develop appropriate strategies
These are the truly distinguishing ability of a financial planning professional
CIFPs Conference - June 11, 2007
Competency AnalysisProfile Overview – Core Domains
Competencies broken down as follows: Three broad functions:
Collection Analysis Synthesis
Six components: Financial Management Asset Management Risk Management Tax Planning Retirement Planning Estate Planning
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Competency AnalysisProfile Overview – Three additional elements
Fundamental financial planning practices “Competencies that cut across all financial planning
components, or that supersede the components and speak directly to that part of financial planning that cannot be broken down.”
Professional skills “Skills that speak to acting as a professional with
clients and colleagues, and to the financial planner’s responsibility to the profession of financial planning.”
Underlying knowledge
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Competency AnalysisProfile Overview - Knowledge
Knowledge elements were identified only after establishment of competencies.
11 Knowledge domains established
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Competency AnalysisInternational Applicability
Competency profile developed to be transferable from country to country
Core competencies are separated from knowledge
Competencies should be consistent from country to country
CFP PROFESSIONAL COMPETENCY PROFILE FINANCIAL PLANNING FUNCTIONS
COLLECTION ANALYSIS SYNTHESIS 1.0 Collects the information required to create a
financial plan.
2.0 Identifies potential opportunities and constraints and assesses information to formulate strategies.
3.0 Synthesizes information to formulate and evaluate strategies to create a financial plan.
Fundamental Financial Planning Practices
1.001 Identifies the client’s objectives, needs and values that have financial implications
1.002 Identifies the information required for the financial plan 1.003 Determines client’s attitudes and level of financial
sophistication 1.004 Identifies material changes in the client’s personal and financial
situation 1.005 Prepares information to enable analysis
2.001 Analyzes the client’s objectives, needs, values and information to
prioritize the financial planning components 2.002 Identifies inter-relationships among financial planning components 2.003 Identifies opportunities and constraints and assesses collected
information across financial planning components 2.004 Assesses the impact of economic, political and regulatory
environment 2.005 Measures the progress towards achievement of objectives of the
financial plan
3.001 Prioritizes recommendations from the financial planning components to optimize the client’s situation 3.002 Consolidates the recommendations and action steps into a financial plan 3.003 Determines the necessity to revise the financial plan
CORE FINANCIAL PLANNING COMPETENCIES
1.1 Collects the quantitative information required to create a financial plan
1.2 Collects the qualitative information required to create a financial plan
2.1 Identifies potential opportunities and constraints
2.2 Assesses information to formulate strategies
3.1 Formulates and evaluates strategies to create a financial plan
Fina
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1.101 Collects information regarding the client’s assets and liabilities
1.102 Collects information regarding the client’s cash flow, income and/ or obligations
1.103 Collects information necessary to prepare a budget
1.104 Identifies the legal issues that affect financial management
1.105 Prepares statements of the client’s net worth, cash flow and budget
1.201 Determines the client’s propensity to save
1.202 Determines how the client makes spending decisions
1.203 Determines the client’s comfort with debt
2.101 Determines whether the client is living within financial means
2.102 Determines the issues relevant to the client’s assets and liabilities
2.103 Determines the client’s emergency fund provision
2.104 Identifies potential cash management vehicles
2.201 Assesses whether the emergency fund is adequate
2.202 Assesses the impact of potential changes in income and expenses
2.203 Identifies conflicting demands on cash flow
2.204 Assesses financing alternatives
3.101 Develops financial management strategies 3.102 Evaluates advantages and disadvantages of each financial management strategy 3.103 Optimizes strategies to make financial management recommendations 3.104 Prioritizes action steps to assist the client in implementing financial management recommendations
Asse
t Ma
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t 1.106 Collects information necessary to prepare detailed statement of investment holdings
1.107 Determines the client’s current asset allocation
1.108 Identifies cash flows available for investment
1.204 Determines the client’s experience, attitude and biases with investments
1.205 Determines the client’s investment objectives
1.206 Determines the client’s tolerance for investment risk
1.207 Identifies the client’s return expectations
1.208 Identifies the client’s time horizon
2.105 Calculates required rate of return to reach client's objectives
2.106 Determines the characteristics of investment holdings
2.107 Determines the implications of disposing of assets
2.108 Identifies potential investment vehicles
2.205 Assesses whether investment return expectations are consistent with risk tolerance
2.206 Assesses whether asset holdings are consistent with risk tolerance and required rate of return
3.105 Develops asset management strategies 3.106 Evaluates advantages and disadvantages of each asset management strategy 3.107 Optimizes strategies to make asset management recommendations 3.108 Prioritizes action steps to assist the client in implementing asset management recommendations
Fina
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mpo
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Risk
Ma
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1.109 Collects details of the client’s existing insurance coverage
1.110 Identifies potential financial obligations
1.209 Determines the client’s risk management objectives
1.210 Determines the client’s tolerance for risk exposure
1.211 Determines relevant lifestyle issues
1.212 Determines health issues 1.213 Determines the client’s
willingness to take active steps to manage financial risk
2.109 Determines characteristics of insurance coverage
2.110 Identifies potential risk management vehicles
2.207 Assesses exposure to financial risk
2.208 Compares the client’s risk exposure to current coverage
2.209 Assesses the implications of changes to insurance coverage
2.210 Prioritizes the client’s risk management needs
3.109 Develops risk management strategies 3.110 Evaluates advantages and disadvantages of each risk management strategy 3.111 Makes risk management recommendations 3.112 Prioritizes action steps to assist the client in implementing risk management recommendations
CIFPs Conference - June 11, 2007
CIFPs Conference - June 11, 2007
CFP Competency ProfileRelevance to Building the Profession
Financial planning, perhaps more than any other profession, has unique country-specific knowledge requirements
A profession cannot exist solely within a single country
Financial planning competency is universal – only the underlying knowledge changes from country to country, and even there, the domains of knowledge remain consistent worldwide
CIFPs Conference - June 11, 2007
Competency ProfileRelevance to the CFP Planner
Serves as reminder of expectations for competent performance
Helps employers better understand and market the value proposition
Gives clients firm understanding of what you can do for them
Serves as basis for continuous professional development
Further distinguishes you
CIFPs Conference - June 11, 2007
The Competency ProfileWhat’s it to you?
Read it Understand it Use it to validate your own competence Paraphrase it to help your clients
understand what you can do for them Believe in the value of its contents Make your clients understand the value Be proud to be a CFP!
CIFPs Conference - June 11, 2007
Financial Planning and CFP
What Next?
CIFPs Conference - June 11, 2007
Where from Here?
FPSC’s Vision – for the CFP
The Gold Standard of Financial Planning
Truly desirable professional pursuit In high demand Influential by virtue of its stature
CIFPs Conference - June 11, 2007
FPSC’s Strategic PlanDesired Outcomes
Respect in the profession and CFP professionals
We’re not quite there yet…
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Trust in the Profession
Our Plans - What can FPSC do?
Partner with universities Partner with allied professions Focus promotion efforts on the FP
value proposition Focus more on employers Better-align education and
continuous professional development
CIFPs Conference - June 11, 2007
FPSC and CFP Certification Changes Ahead
Build and leverage external relationships Attract new high quality candidates to the
profession and develop students Help to ensure appropriate support and
development structures to help CFP professionals develop professionally and contribute to the growth of the profession
CIFPs Conference - June 11, 2007
Evolution of the ProfessionChanges Ahead
Develop government and regulatory relations
Enhance certification system and pathways
Enhance our governance structure Hear more from you
CIFPs Conference - June 11, 2007
Evolution of the ProfessionIn Closing
We can lead, but ….Professions are built from within
Get involvedWith FPSCWith your association
Believe Our standards are your standards!
CIFPs Conference - June 11, 2007
Thank You for Your Time and
Patience…now let’s go step it up!