Ronald F. Duska and Julie Anne Ragatz cite seven components for a professional job: a body of technical subject matter, academic study, entrance barriers, independence, public recognition, professional societies, and a code of ethics. The CFP designation that started in the United States, in 1969, can be called a profession, as it satisfies all of these seven elements. However, relative to doctors and lawyers that have been “a profession” long before the CFP designation was established, our status and recognition are low.
How to Increase Awareness of Financial Planning
A variety of efforts are needed if we want to increase our low status and recognition. One step would be to legalize our eligibility recognized by the government or to set forth stricter educational requirements. More room needs to be filled to close the gap of “public recognition,” which is one of the seven components to be recognized as “a profession.” This doesn’t mean that we ought to spend more money on advertisements or public relations efforts. Rather, with the most effective advertisement being the word-of-mouth by clients, we should work hard to give clients great satisfaction from our financial planning service, and potentially open more doors for clients who have never been exposed to financial planning.
From this perspective, we should continue to try to improve our access to the middle class and company employees, in addition to the traditional financial planning market clientele. Also important is providing financial planning counseling and financial-understanding education to the underprivileged, the welfare beneficiaries and the poor. Servicing the middle class market may be possible on the hourly-fee basis, as Sheryl Garrett of the U.S. does. However, approaching the low-income people below the middle class for a profit purpose wouldn’t be appropriate.
Everyone has Personal Life Goals But Not Everyone Has Money
Financial planning can be defined as a process to manage a client’s finances to fulfill their life goals. Financial planning should be provided to those who are in need of it, regardless of the amount of wealth they possess because everyone has life goals but some people don’t have the money to pay for the service. It would be difficult for the low-income people to pay for the fees for financial planning advice or education. Thus, if the national or local government supports them, it will be able to help reduce their burden to the public. This proposed system would be similar to the Korean public health insurance program, where everyone is required to get a regular medical checkup and the cost is supported by the state-sponsored Health Insurance Corporation.
Two things need to be done to make financial planning counseling and education for the underprivileged possible. The first is to establish a new topic in the CFP body of knowledge that covers accessing the disadvantaged class. The current FPSB body of knowledge contains information about “debts” and “government benefit plans,” but lacks content on “financial understanding.” This section should cover ways to:
- access the financially underprivileged people
- help improve their understanding on finance, and
- deliver the education and tailored counseling to them.
Pro Bono Publico
The second thing that needs to be done is to include in the code of ethics the requirement to spend time providing free financial planning counseling or education to the underprivileged. Just as pro bono publico (free services for the public interest) has started as a free legal aid for the disadvantaged of the community, CFP professionals can make a similar contribution to the community in the sector of financial planning.
Many countries already have a “Financial Planning Day or Week” through which they are providing free financial planning counseling or education. Of course, not all CFP professionals are participating at this annual event. Although the situation is slightly different in each country, there is always a shortage of volunteers who can participate in the free counseling and education programs. If the code of ethics sets forth a requirement of free service to be fulfilled for a certain amount of time each year or if a work experience training program includes a prerequisite of free service time, more and more people will be able to receive the benefits of financial planning. Through this, CFP professionals will be able to provide more value to society as “a profession”, as well as receive fulfillment in their own lives, at the same time.