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Financial Regulation Can Be a Poison and a Medicine

Jae young Yang - CFP Koreaby Jaeyoung Yang, CFP

A job that requires a high level of professionalism involves many characteristics that cannot be easily accessed or comprehended by ordinary people, as well as many regulations that the profession has to comply with to protect clients’ interests. Financial planners have to abide by many regulations concerning recommendations of financial products associated with the practice of financial planning.

Two Types of Regulation

The regulations related to financial products are, in a large sense, of two kinds.

  • The first type of regulation concerns the law. In order to be able to sell an insurance product, one has to have a license, such as the Equity-Linked Life Insurance Sales Manager License, whereas one recommending a fund requires a Fund Investment Advisor License.
  • The other type of regulation regulates financial organizations on how they handle financial products.

Benefits of Regulation

Many regulations, in practice, can constrain professionals due to all the restrictions. On the other hand, they also have benefits:

  1. The existence of regulations on a certain professional practice can also be a testimonial to the existence of a more professional system that can protect clients’ interests.
  2. The requirement of licenses for a certain practice and the existence of rules within an organization make for a system where clients can trust and confide in the professionals.
  3. The requirement of licenses also plays the role of a guard against easy access to the profession by the ordinary, ensuring an exclusive right to the professional practice.

What It Takes To Be a CFP Professional

Given the nature of financial planning, some regulations are needed that can differentiate CFP professionals from other financial planners. This chart shows the qualifications a CFP professional has:

CFP Professional


Comprehensive written exam


3 years or more

Continued Training

A minimum of 30 hours every two years

Being a CFP professional requires passing the difficult CFP examinations and a practice experience of three years or more. Unfortunately, the work that financial planners conduct can be done without a particular certification and without passing any examinations. This is because there is no law that protects CFP certification, therefore allowing anyone to practice financial planning.

Ideas Into Reality

This is one of the biggest complaints that CFP professionals have. One way to solve this problem is to allow only those with particular eligibilities to practice financial planning under the law. However, it is very difficult to enforce this in reality. Apart from this, FPSB Korea, which supervises CFP professionals, would need to carry out continual education and training programs while sanctioning CFP professionals who breach the code of conduct, in order to uphold the quality of CFP certification. Lastly, these activities would have to be known to the clients and general public to create awareness and respect for CFP professionals.

In addition, CFP professionals themselves have to make an effort to abide by the regulations and rules related to financial planning, and constantly educate themselves with training programs. It is very difficult for a CFP professional to be an expert in all the areas of insurance, tax, investment, retirement, and estate planning and, in fact, they don’t need to be experts in all of those fields. It is more important for them to have a good network with the experts in each of those areas. For example, if a CFP professional, without a CPA or tax accountant license, should mention tax-saving measures on his or her own while practicing estate planning; it could constitute a breach of the tax accountant law. Not only that, but his or her incomplete knowledge on taxes could lead to a recommendation of a wrong tax-saving measure or even a tax evasion act. One has to note that this ultimately could entail a compromise of CFP professionals’ trust, professionalism, and respectability.

Many regulations on financial planning practice can pose difficulties to a CFP professional’s practice. However, clients can be confident that regulations play the role of protecting their interests. Therefore, the existence of appropriate and reasonable regulations on financial planning practice concerning the requirements of certification, continuing education and training programs, code of ethics, etc., can be beneficial to the financial planners, too.

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