Letters to the editor: Certificate students take the CFP exam

The article “CFP Board extends reach with massive online course” (InvestmentNews.com, Aug. 14) about the Certified Financial Planner Board of Standards Inc.’s massive online open-course initiative with the University of Illinois, mentions that most students don’t take the CFP national examination.
According to the article, “The CFP Board released a study showing that most students avoid the exam. In a survey of 506 students who earned bachelor’s or master’s degrees at three state universities over a five-year period, 351 did not take the certification test.”
In fairness to the students and institutions providing CFP education, it is only degree-seeking students who seem to be avoiding the exam.
Students in certificate programs — which are offered in many cases by the same institutions that offer the degree programs — do take the exam. These students are typically already employed in the financial services field, are older than their degree-seeking counterparts and are often laser-focused on earning the CFP credential.
It is difficult to determine the percentage of graduates who take the exam from the 177 existing certificate programs, as such data aren’t collected. However, the sense from the three largest certificate programs is that 75% to 90% of our graduates take the examination.

Jesse B. Arman
Vice president of regulatory and government affairs
College for Financial Planning
Centennial, Colo.

There is a fly in the alphabet soup

The Just Thinking column “Wading through the alphabet soup” (InvestmentNews, Aug 19) addresses an important issue for financial advisers and individual investors: the value, or in some cases the lack thereof, that professional designations bring to the financial advice profession.
Indeed, the fly in the alphabet soup of professional designations isn’t so much the quantity of the credentials in our space, but the quality. The nursing profession maintains 200-plus certification programs, most of which are accredited by third-party organizations that “certify the certifier.”
Advisers, consumers and industry publications need straightforward ways to evaluate professional designations.
One place to start is to review the information listed on the Financial Industry Regulatory Authority Inc. website. There are five important questions stakeholders should ask when evaluating a credential, and Finra addresses most of these on its site: 1) Who offers the credential and why? 2) Does the program have rigorous requirements for each of the “Four Es” (experience, education, examination and ethics)? 3) Is there an independent disciplinary process that can cause certificants to lose their rights to hold the mark? 4) What are the continuing competency requirements? 5) Who certifies the certifier?
This final point is crucial. The two accrediting bodies for personnel certification programs in the U.S. — the American National Standards Institute and the National Commission for Certifying Agencies — administer standards for certification bodies and certification programs. ANSI, for example, works regularly with the Departments of Labor, Commerce, Education, and Health and Human Services, establishing criteria for voluntary certification programs within an industry or profession that are most relevant and important.
These are the certifiers of certification bodies and they ensure the credentialing programs are objective, fair, transparent and consistently distinguish competency. Those programs that have met these standards are recognized with a seal of approval that advisers and consumers (and industry magazines) should feel good about.
In the end, greater consumer scrutiny and regulatory rule making will lead to a winnowing of credentials through the banishment of lower-quality credentials and the strengthening of others. In the meantime, check the soup before sipping.

Sean R. Walters

Chief executive and executive director

Investment Management Consultants Association

Greenwood Village, Colo.

Try another approach to arbitrating complaints

The editorial “Time to end mandatory arbitration” (InvestmentNews, Aug. 19) raises some interesting questions.
Does mandatory arbitration prevent an equitable solution for the investor or is it just a way of mitigating liability for the broker or the broker-dealer? I suspect that most investors never give it a thought when they are establishing an account, presumably because they trust the financial adviser with whom they are working.
Perhaps another reason is that they don’t read the fine print of their agreement, which is more often the case. In an age where personal responsibility is waning, it is just as easy to blame someone else for mistakes in investing.
Because markets are unpredictable, we only have to look at the experience of the past five years to understand that markets can and do fluctuate, and not always in investors’ favor.
I have seen too many court cases where the plaintiff is considered the wronged party, and the defendant is guilty until proven innocent. I think there is a better way to approach investor concerns and rights.
Perhaps the best way to approach this situation is to allow the investor to file a complaint with a court of competent jurisdiction first. Then arbitration would have to be the first step in the process.
Discovery and depositions can be made before the arbitration commences, so that the facts of the case can be clearly delineated. Once arbitration commences, this information can be used by the parties to outline the facts of the complaint.
If the arbitration is unsuccessful, most of the preliminary court work has already been done.

Also, the discussions that occurred during the arbitration can’t be used in the court case. Only the depositions and the discovery can be used.
This avoids biasing the court case for either the plaintiff or the defendant.
All too often, plaintiff’s attorneys take these cases on a contingency fee basis, which is an incentive to overlitigate the case. By requiring arbitration first, it gives the parties an opportunity to resolve the issues before getting involved in a war in court.
W. Thomas Curtis
Managing partner
FSP and Associates LLC
Gaithersburg, Md.

Test is outdated, requires expertise in too many areas

Regarding the article “CFP Board extends reach with massive online course” (InvestmentNews.com, Aug. 14), I began in the business of managing money for individuals in 1998 after more than 20 years on the institutional side of the business.
I sat for and passed three parts of the certified financial planner programs.
I declined to proceed, for several reasons. First, my job is to work with clients and to have the ability to recognize when an expert needs to be contacted in a particular field. The CFP exams wanted the candidate to become an expert in every field, which isn’t possible, given the volume of knowledge required in each field to even be somewhat competent and proficient.
It is a disservice to a client to proclaim this expertise when it is impossible to retain that much information.
Additionally, having been in the investment field for a long period prior to the investment exam portion, it was interesting to find so much wrong or outdated information.
There was a section dealing with flower bonds, which were last issued in the 1960s and finally totally expired in the early 2000s.
Unfortunately, too many people associated with the board and the institution are academics. Generally, their contact with reality on any level is abstract, utopian and theoretical at best.

Larry Miller
President

Asset Management and Planning LLC
West Columbia, S.C.