April 15, 2024
Until last year, the Certified Financial Planner Board of Standards led by CEO Kevin Keller was organized under Section 501(c)(3) of the Internal Revenue Code. That meant that the standards-setting body for certified financial planners (CFPs) had to act strictly in the public interest — it had less scope to promote the benefits of a financial planning career and develop the CFP workforce.
Following a reorganization in early 2023, the group now consists of a 501(c)(3) foundation (the CFP Board Center for Financial Planning) — whose mission is to promote competent and ethical financial planning and increase diversity among CFP certificate holders — and a 501(c)(6) organization (the CFP Board of Standards) that can act on behalf of certified financial planners. They’re known collectively as CFP Board and Keller is CEO of both.
One of the first major endeavors for the 501(c)(6) group was a compensation survey released in February, which shows that CFPs earn more than other financial planners and have greater career satisfaction.
The 2023 CFP Board Compensation Study says that the median compensation for financial planners was $198,500 in 2022, but that CFPs earn 12% more than other financial planners.
Eighty-four percent of the 980 CFP survey respondents from across the country reported a high to very high sense of personal fulfillment. Respondents gave good to excellent ratings on measures like job stability (88%), work/life balance (80%), compensation (71%) and career advancement (65%). Eighty-nine percent of responding CFPs said they plan to stay with their current companies over the next two years, and 75% of those planning to leave expect to stay in the financial planning profession.
“This gives us great data to go out and talk to high school and college students and career changers and say, this is what you can expect. Here is what coming into financial planning means,” Keller told reporters at a dinner earlier this year. “You get all these benefits from an altruistic standpoint, and here is data on the financial benefits.”
Higher standards
CFP Board says its mission is altruistic because its code of standards for certified financial planners mandates what is known as a fiduciary standard of client care: They must always act in the best interest of clients. Some other types of advisers, such as those who work for brokerage firms, are held to a suitability standard: They must give advice that is suitable based on clients’ needs, objectives and circumstances.
Though the distinction may sound slight, there is big money at stake. Keller’s organization is at odds with other groups representing advisers and the Wall Street firms that employ them over a Department of Labor proposal to require that all advisers be held to a fiduciary standard when giving retirement advice. These other groups say the proposal will increase costs and keep retirement advice out of reach for many Americans.
Keller touched on the different standards in a statement about the new compensation study.
“At CFP Board, we are committed to certifying competent, ethical financial planners. CFP certification is good for financial planners and the public they serve,” he said.
More people taking the CFP exam and maintaining their CFP credentials also means more revenue for the CFP Board of Standards. But Keller said the mission is still what matters.
“CFP Board’s original mission was to benefit the public and that remains a key component of what the Board does, and of our goals and mission,” he said. “We have data that shows that 86% of consumers want a planner who has gone through rigorous exams and training.”
Hefty pay increases
The CFP Board compensation study showed 7% to 9% increases in annual compensation from 2019 through 2022.
Experience matters, too: Median compensation for those with more than 20 years in financial planning was $250,000 in 2022, according to the survey. The median for those supervising six or more staff as $385,000. Median compensation for those with less than five years’ work experience was $100,000, and $152,000 for those with five to 10 years of experience.
The survey also collected data on benefit packages, paid time off and working from home: 20% of respondents said they work remotely four or more days per week.
The survey showed that 44% of respondents are self-employed or equity partners in a company.
CFP Board’s research is aimed at growing and diversifying the workforce. The target audience is college and high school students and those considering a career switch. But there’s another critical audience: students’ parents.
“Parents play a bigger role from a career direction standpoint than their children will admit,” Keller said. The earnings potential in the profession is a major draw for parents, he said.
Videos on ethics
The CFP Board has released a nine-part video series for CFPs and the public on the organization’s process for enforcing its code of standards and adjudicating client complaints. The group also has produced a handbook on the process for CFP certificate holders.
“The steps CFP Board has taken to uphold its Code of Ethics and Standards of Conduct distinguish CFP certification from other credentials in the financial services profession,” the group said in a statement.
“CFP Board aims to uphold standards in a manner that is fair to those whose conduct is being evaluated and credible to the public,” Keller said in the statement. “These new resources are designed to educate CFP professionals and the public, foster confidence in our processes, support ongoing professional development and maintain the integrity of CFP certification.”
More associations are finding they need to boost staff compensation.
Recruiters offer insights for job candidates, associations.
*/
Job candidates for association C-suite seek more options to work away from office
Nov. 5, 2021
Pay transparency slow to catch on among associations