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Why CFP Professionals Need Increased Education Standards

By Suresh Sadagopan, CFP, India

Financial planners offer advice to clients on financial matters, so it is necessary to have a level of knowledge and skill that is suitable to advise a client correctly. Ongoing, continuing education keeps financial planners current and allows them to maintain a competitive edge.

Education requirements for financial planners is an issue that causes ongoing debate within the financial planning community. This issue should be considered within the context of the environment we operate in. The financial landscape has become complex and the needs and aspirations of clients have increased significantly. In this environment, financial planners must have a good understanding of the fast-changing subject matter and understand clients and their requirements.

Subject matter knowledge should probably come from the CFP certification program and practice experience. Understanding client needs will come from a mindset that empathizes with clients and is constantly thinking about what is best for them. Truly understanding the client is a time consuming process and creating a plan that fulfills their requirements and keeping the client completely engaged with the plan, is an art by itself. No education can prepare an advisor for this.

Financial planning education and understanding the client are equally important for a successful advisory practice and a fulfilling client relationship.

Increasingly Complex Environment

The landscape today is far more complex than it was even a decade ago. The sheer number of products and services available is mind boggling and would confuse even a seasoned professional. Also, the complexity in the environment has increased, be it the way we communicate (social networking has changed the game forever), the way we work or shop, and the way we access, process and consume information/entertainment. These very changes in the environment have thrown up challenges and opportunities for advisors.

Education in just one particular field cannot successfully prepare a planner for facing all of these changes. However, a person who is equipped with education in a particular field is exposed to knowledge in his/her field of study. Knowledge helps widen perspectives and assists advisors in relating and connecting with clients. Simply put, education helps the advisor to elevate himself/herself to a higher level as compared to the mass of advisors who are competing for the client.

In another sense, gaining an education proves a willingness and desire to acquire knowledge. The individual demonstrates enough initiative and drive to complete the education in their chosen area and they also display their mental capacity.

Requiring a Degree

So, what kind of education should an advisor have and at what level? I think a degree in any field should be the minimum for advisors. If the degree is in a finance related field, the individual will have a wide understanding of the broad finance area, which is even better. There is also a certain level of maturity and knowledge which a college education confers, which would benefit the advisor.

In addition, courses and certifications in the financial planning area would further increase the domain knowledge and offer deep insights into specific areas. This should be seen as ongoing knowledge acquisition and upgradation, which is expected of a practitioner. This type of knowledge acquisition is left up to the discretion of the individual. All practicing advisors should be mandated to undergo further specialized certifications to ensure that practicing advisors keep improving their knowledge and possess sufficient knowledge to advise their clients properly. This is something that could be institutionalized.

Any profession, if it wants to be taken seriously, should subject its practitioners to some serious learning. In medicine, doctors study for 7-8 years, sometimes more, before they practice. Even after that, they continue earning qualifications and updating their knowledge to be current. Other professionals such as lawyers, chartered accountants, or architects also undergo serious study and apprenticeship.

The financial planning profession, apart from the education portion, should introduce apprenticeship to train new aspirants in the profession. This should be made compulsory if we want to increase the quality of professionals in our field. Increased standards will ensure that we are taken seriously by the public and regulators and in turn bring respect to practitioners and the financial planning profession. In other words, we have work to do.

1 comment to Why CFP Professionals Need Increased Education Standards

  • Ashok Kumar Sethi

    Mr Suresh Sadagopan has written a very good constructive article. He has used his acumen-ship and total personal experience in it. I fully appreciate his suggestion for Apprenticeship before certifying a Certified Financial Planner.His emphasize for Continuing Professional Education is admirable. In every moment changing scenario in financial activities demand the up-gradation of knowledge in the field. There is no age bar in this profession and the more equipped one is with day to day happenings would never make retirement from this profession.I also feel there is an acute need of studying psychological lessons to understand the client and the various facts and figures provided by him.This would help a CFP to avoid any litigation, etc; in the long run, because none of the clients will disclose all ins and outs of his financial outputs to anyone, then what to talk of the disclosures to his CFP.

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