Cary List

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. The CFP Yesterday, Today and Tomorrow

• Cary List
• EVP and COO
• Financial Planners Standards Council

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.The CFP Yesterday, Today and Tomorrow

• Todays discussion
• What makes a profession?
• Does financial planning meet the test?
• Should the CFP community strive for recognition
  as a profession?
• If so, how do we get there?

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• What makes a profession a profession?

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A Profession Defined My Favourite Definition

• A calling, requiring specialized
  knowledgeincluding instruction in skills and
  methods and the scholarly principles underlying
  such skills and methods, maintaining, by force of
  organization or concerted opinion high standards
  of achievement and conduct, and committing its
  members to continued study and to a kind of work
  which has for its prime purpose the rendering of
  public service. 1

1 Websters New International Dictionary
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A Profession Defined
One Piece at a Time

• Is Financial Planning a Calling?
• If so, what exactly is the calling that is
  financial planning?
• More in a few moments

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A Profession Defined One Piece at a Time

• Do CFPs require specialized knowledge?
• Clearly yes but is it the right knowledge?
• More on this in a few moments too!

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A Profession Defined One Piece at a Time

• Instruction in Skills and Methods?
• Yes, through FPSCs rigorous education program,
  but

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A Profession Defined One Piece at a Time

• High standards of achievement and conduct
  maintained by force of organization and/or
  concerted opinion?
• Yes, through FPSCs Examination and Ethics
  standards, and through enforcement of same

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A Profession Defined One Piece at a Time

• Requirement for continued study?
• Yes, through CE requirements.

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A Profession Defined One Piece at a Time

• Are members of the greater CFP community
  committed to a kind of work which has for its
  prime purpose the rendering of public service?

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A Profession Defined One Piece at a Time

• While many CFPs are committed to serving the
  public good, if it is to be a true profession
  financial planning must
• Not be seen as solely a marketing tool
• Be recognized as serving the public good

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Two more key pieces of the puzzle

• Two key pieces are missing
• At its heart, a profession must include
  uniformity and consistency of service
• That is, Financial planning is financial planning
  is financial planning

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Two more key pieces of the puzzle

• If a tree falls in the forest.that is,
• Without
• Public recognition of the CFP
• Perceived public value
• Recognition of financial planning as a public
  service
• Can we really call financial planning a true
  profession?

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Before we proceed

• Where is the CFP Today?
• 16,000-strong
• Growth exclusively through its rigorous
  certification program
• 97 annual retention rate
• Brand awareness continues to grow
• No credible alternative professional financial
  planning designation

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How did we get here?

• Commitment of key individuals and organizations
  to stay the course towards consolidation of
  alphabet soup of designations
• Commitment to highest standards and 4E program
• Commitment to serving the public interest
• Commitment of dedicated CFP professionals
• .But, our work is far from done.

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A little reality check

• Recent poll and survey
• Very limited provision of comprehensive financial
  planning
• Very few pay for financial planning service
  directly
• Most Canadians feel having a financial plan is at
  least somewhat important to them, but
• Most dont have a plan, and
• Of those that do have a plan, most didnt use a
  financial planner to design it!

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A little reality check

• While most Canadians believe having a financial
  planning designation is important
• They dont know what the designations are!
• Most believe that financial planning is
  regulated, and therefore assume
• If my advisors a financial planner, he must be
  qualified!

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A little reality check

• Clearly, much work is still needed on
• Public understanding of what financial planning
  is, let alone the CFP
• Perceived public value to using a CFP
  professional
• Recognition of financial planning as a public
  service

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FPSC MISSION

• FPSC benefits the public by leading the
  evolution of the financial planning profession in
  Canada through the development, enforcement and
  promotion of the highest competency and ethical
  standards in financial planning as identified by
  individuals who have earned the CFP designation.

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How do we achieve our mission?

• We must
• Define the calling that is financial planning
• Ensure that the specialized knowledge is
  appropriate for the delivery of professional
  financial planning
• Ensure relevance of the instruction in skills
  and methods

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How do we achieve our mission?

• We must
• Help establish concerted opinion around
  standards of achievement, practice and conduct
• Ensure relevance of requirements for continued
  study.

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How do we achieve our mission?

• We must
• Never lose sight of rendering of public service
  and the public good by
• Ensuring uniformity and consistency of service
• Continuing to build public awareness about
  financial planning and the CFP, and the benefits
  that financial planning brings to Canadians

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Four specific initiatives to help

• Spread the word
• Define financial planning
• Establish clear standards of practice for
  professional financial planners
• Establish extensive, clearly defined proficiency
  standards for CFP professionals

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1. Spreading the Word

• If you build it they will come or will they?
• Thus, FPSCs Brand Ambassador program
• Leverage the message through the greater CFP
  community
• Get the message out!

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Brand Ambassador Program 4 Key Messages

• What is financial planning?
• Who can benefit from financial planning?
• Who are qualified to offer professional financial
  planning?
• Where can they learn more?
• www.cfp-ca.org

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The Brand Ambassador Program
Its a heavy load..
We cant do it alone!
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2. Defining Financial Planning

• Until now, we have not had a clear and concise
  articulation of exactly what financial planning
  is
• How can we expect others to embrace financial
  planning as a profession if we dont all speak
  the same language?

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Financial Planning Defined

• Financial Planning is the process of creating
  strategies, considering all relevant aspects of a
  clients financial situation, to manage ones
  financial affairs to meet life goals.

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Financial Planning Defined

• Definition underlies all other projects,
  including
• Practice Standards
• Competency Profile

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3. Establishing Clear Standards of Practice

• What will Practice Standards accomplish?
• Help establish concerted opinion around
  standards of achievement, conduct and delivery
• Ensure uniformity and consistency of service
• Build on the definition of financial planning

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CFP Practice Standards the Building Blocks
Code of Ethics

• Identifies what is the expected behaviour of all
  CFP professionals in all aspects of work
• Mandatory for all CFP professionals, but not
  necessarily specific to the practice of financial
  planning

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CFP Practice Standards the Building Blocks
Financial Planning Process

• Lays out what planners should do when performing
  financial planning

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CFP Practice Standards the Building Blocks

• Financial Planning Process
• Code of Ethics

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What are CFP Practice Standards?

• Bring together process and Code of Ethics
• Serve to ensure consistency and uniformity of
  practice, while still leaving room for creativity
  and professional judgement
• Assist CFP professionals by providing guidance
  and clarity

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Applicability of the CFP Practice Standards

• Apply, at least in part, to both comprehensive
  financial planning and to components thereof
• Some professional judgement involved

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Definition of Financial Planning - Revisited

• Financial Planning
• Includes all components of a comprehensive
  financial plan
• Financial Management
• Asset Management
• Tax Planning
• Risk Management
• Retirement Planning
• Estate Planning

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Financial Planning Components Defined

• Financial Management
• Strategies and techniques to optimize short- and
  mid-term cash flows, assets and liabilities
• Asset Management
• Strategies and techniques to optimize returns on
  assets in consideration of the client's
  requirements and constraints

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Financial Planning Components Defined

• Risk Management
• Strategies and techniques to manage exposure to
  financial risk
• Tax Planning
• Strategies and techniques to maximize present
  value of after-tax family net worth

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Financial Planning Components Defined

• Retirement Planning
• Strategies and techniques for accumulation of
  wealth and for withdrawal during retirement years
  
• Estate Planning
• Strategies and techniques for preservation and
  distribution of accumulated assets

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The CFP Practice Standards

• The applicability test
• Are the creation of strategies involved?
• Are all relevant aspects of the clients
  financial situation to be considered?

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The CFP Practice Standards

• Desired Outcomes
• Clarify expectations, both for CFP professionals
  and the public
• Result in better-informed public
• Raise confidence in CFP professionals

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The CFP Practice Standards - Development

• Development began three years ago
• 10 draft standards were introduced in September
  2002

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The CFP Practice Standards - Development

• Beginning in fall 02, focus groups solicited
  feedback from CFP professionals
• Revised draft document in January 2003
• Over 30 CFP professionals involved in the
  creation of the revised draft

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The CFP Practice Standards - Development

• Revised draft posted on web for comment in
  January 2003
• Dozens of comments analyzed and synthesized into
  a new revised draft released in September 2003

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The CFP Practice Standards - Development

• Launch in October 2003
• Comments considered until October 31, 2004
• Final standards January 2005
• Mandatory implementation April 1, 2005

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The CFP Practice Standards - Development

• New draft late July or early August
• www.CFP-CA.ORG

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The CFP Practice Standards - Comments

• Comments received on
• Modular/Segmented financial planning
• Non-financial-planning activities
• General applicability
• Nature of engagement letter
• Disclosure requirements
• Prescriptive versus principled nature of
  standards
• New draft will reflect comments as appropriate

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4. Establishing Proficiency Standards

• Professional Competency Analysis Project
• Re-evaluate the knowledge, skills and abilities
  required of CFP professionals
• Develop a new competency profile for CFP
  professionals
• Leads to a new test blueprint
• Sets the foundation for new pre-certification
  requirements
• Lays the groundwork for new CE requirements

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Establishing new Proficiency Standards - Why?

• First time a competent financial planning
  professional is being defined
• Competency be based on performance, not knowledge
• Its not about what you know, its about what
  you do
• Based on the clear definition of financial
  planning and on the Practice Standards

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Competency Analysis - Anticipated benefits

• Provide yet more clarity as to what a CFP
  professional does, and expectations for competent
  performance
• Better relate the real world of financial
  planning to Education and Examination

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Competency Analysis Building Blocks

• Built on the following
• Definition of financial planning
• Statements of competency for each of six
  financial planning components
• Statements of broad-based pervasive financial
  planning skills not unique to specific components

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Competency Analysis Building Blocks

• As well as
• Statements of professional skills
• Specific knowledge required
• Together, the competency statements, professional
  skills, and underlying knowledge form a complete
  Competency Profile for CFP professionals

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Competency Analysis Development

• Development began in June 2003
• Independent Consultants
• AAC
• RWG

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Competency Analysis Development

• It all came together at AAC met in May 2004 to
  finalize the framework and the statements of
  competency
• Now its the greater CFP communitys opportunity
  to participate

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Competency Analysis Next Steps

• Two surveys released this week and last
• Competency
• Knowledge

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Competency Analysis What next?

• Once Competency Profile is validated
• New Test Blueprint
• New curriculum guidelines and requirements
• New CE guidelines and requirements

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In summary

• The movement towards recognition of financial
  planning as a profession must continue if we are
  to meet the needs of the public
• Four key initiatives by FPSC are helping to lead
  the way
• Communication of a clear and concise definition
  of financial planning
• the Brand Ambassador program
• the CFP Practice Standards
• the CFP Competency Profile

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In Summary

• One thing is certain
• Through these efforts, and the work of CFP
  professionals like you, financial planning will
  be recognized as a profession and the CFP as the
  mark of the financial planning professional in
  Canada

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In Summary

• Thank You

QUESTIONS?