A REVOLT, OF SORTS, AMONG PLANNERS: LARGEST CHAPTERS’ GRIPES GAIN EAR OF TOP CFP BODY

Don’t call them the seven dwarfs anymore.

The seven largest regional organizations of the Institute of Certified Financial Planners — representing one quarter of the group’s 12,000 members — are demanding a greater say in the parent’s business.

Increasingly critical of recent ICFP initiatives, leaders of the regionals in recent months have pushed to be included in the Denver-based organization’s discussions with the International Association for Financial Planning, which involve a possible merger, among other things.

They’ve also lobbied for changes in newly drafted industry practice standards — and managed to get the commentary period extended. And they’ve argued for increasing the share of membership dues that flow to local chapters.

Big 7 among ICFP flexing their muscle

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The formation of the self-proclaimed Big 7, which held its first meeting in March in Philadelphia, is proof that even as the two biggest industry associations hold talks that could lead to a merger, planner groups are becoming ever more fragmented.

Just last week, an alliance of planners known as the Gang of 71 announced it was taking a head count of like-minded advisers in hopes of negotiating better terms from fund firms, perhaps by even forming a new sub-group of “wealth managers” (InvestmentNews, June 15).

For their part, leaders of the Big 7 — representing the Boston, Chicago, New York, New Jersey, Philadelphia, Dallas and Michigan areas — have deep concerns about the talks between ICFP and Atlanta-based IAFP.

Valerie Lasher-Adelman, the president of the New York chapter who runs a firm affiliated with H.D. Vest Investment Securities Inc., says a merger would be “against our general philosophy. Our group is made up solely of people with CFPs.”

The president-elect of the Boston chapter, Thomas McFarland, says a merger with IAFP is “going to impact us locally. In many cities it’s a cultural difference” between the two groups. Mr. McFarland is president of Darrow Co. Inc., a Concord, Mass., firm running more than $25 million.

While the ICFP is open only to CFP licensees, the 17,000-member IAFP also includes insurance agents, accountants, lawyers and service providers to financial planners.

ICFP’s executive director, David Brand, met with Big 7 members at their March meeting in Philadelphia. That “relieved a lot of anxieties,” about the potential merger, says Chicago chapter president James Barnash, director of financial planning in the Chicago regional office of Lincoln Financial Advisors Corp.

ICFP president Bob Klosterman says he has no plans to include the Big 7 in the talks with the IAFP. “I don’t really sense any division within this institute about this issue. We’ve actively listened to this group; we have their input.”

Mr. Klosterman, who also leads White Oak Advisors Inc. in Minneapolis, says it’s “healthy” for Big 7 members to voice their concerns. “We”re going to listen to all our members,” he adds.

The coalition seems to be getting results. A June 5 letter from Certified Financial Planner Board of Standards President Robert Goss to Boston chapter President Marc Collier says the Denver-based CFP licensing body will ask for another round of comments on how “client” is defined in new practice standards that are slated to take effect in 1999.

Big 7 members want a client to be defined as someone who has engaged a planner or signed a contract to work with one. Otherwise, they fear, people with whom they have casual conversations about financial issues at parties may be construed in a court as being clients.

everybody wants to sue

“We live in such a litigious society,” says Bruce Tucker, president of the ICFP’s Northern New Jersey chapter. “We don’t have any problem with being held to a higher standard, but we may have a problem with language that makes it easy for a sharp attorney to sue a planner.” Mr. Tucker is also president of Sterling Financial Group in Sparta, N.J.

Mr. Goss says the CFP Board is reconsidering the practice standards issue and asking for comments. The standards that are to take effect in January “simply use the current definition of client” in the organization’s Code of Ethics and Professional Responsibility, adopted in 1992, he says. That definition is for a “person, persons or entity for whom professional services are rendered.”

The ICFP’s Mr. Brand, who met with CFP Board officials about the standards, says: “They were extremely open to our comments. Everyone is interested in the same thing, for CFPs only to give professional, accurate advice.”

Big 7 members also have asked the ICFP for the right to charge their own local membership dues on top of the $225 collected annually by the national group — or receive a bigger share of the national pie.

The ICFP recently polled leaders of the seven societies about how such a plan would be structured, but has not yet announced the results.

“We find that because our memberships have grown, our needs for our individual societies have matured,” says Michigan chapter president Elizabeth Allen, whose Livonia-based firm oversees about $25 million in assets.

Much of the dues paid by large society members goes to support smaller organizations, she says. “They have different needs from what we do. We’re doing more member support on the local level, holding our own educational meetings.”

The Big 7 are even creating an informal speakers bureau that aims to recruit big-name investors, such as former Fidelity Magellan Fund manager Peter Lynch, who spoke at the Boston chapter’s meeting in May.

Big 7 members will meet again at the ICFP’s conference in San Diego in late July. There they hope to come up with more agenda items.

“We want to have some influence on the national scene,” Boston’s Mr. McFarland says. “We are a big group. National (ICFP) is paying more attention to us. We’re getting value now from the institute.”