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  • Steven Lee

My Newest Paper is on SSRN!

This is a piece I have been working on for a couple of years. It's titled, "Financial Services is Not a Profession." While I anticipate some resistance to this within the industry, it is something that must be said. The CFP Board, the FPA, and others strive to carve-out a profession from an industry--that of the financial planner. The basic problem with this is that terms such as "financial planner," "financial advisor," and even "financial services" is a fluid term couched within an amorphous arena with overlapping specialties, designations, and marketing niches.


In my paper, I peruse the literature from multiple disciplines, including law, medicine, accounting, teaching, social work, and the military. There are four major themes within this scholarship that constitutes a profession:


1. A common knowledge base of which all members of a given profession absorbs and applies to daily practice.

2. A uniform admissions process by which candidates pass from lay persons into members of the profession itself.

3. An organization that serves to evaluate, license, and regulate the profession's membership. In some cases, these responsibilities are divided between a governmental entity and a trade organization, where the former licenses and disciplines members and the other provides educational, networking, and other services. Nevertheless, the administrative qualities are the same.

4. A code of ethics and/or set of practice standards to which all members are held. This is perhaps the most important as well as the major factor holding financial services back from the threshold of being considered a profession. Specifically, the frequent, schizophrenic attitude towards the fiduciary standard in financial services, I argue, stands in the way of financial services (and even the microcosm that is financial planning) from qualification.


Both the CFP Board and the FPA regard financial planning as a profession, though this hardly makes it true. Planners come in all colors and stripes; Many hold securities or advisory licenses while others do not. Some are fee-only, others make money only by commission, and still others are compensated through a hybrid model. Most financial planning practitioners wear multiple hats and are regulated by different entities, including but not limited to the CFP Board, state securities regulators, FINRA/SEC, the AICPA, the state board of accountancy, the state board of insurance, the state bar, the IRS, and the Office of the Comptroller of the Currency.


Additionally, a plethora of designations abound, the range of which includes estate planning, risk management and insurance, holistic financial planning, hedge fund operations, wealth management, retirement planning, life underwriting, financial analysis, and more. Lastly, some roads to being a financial advisor or even a financial planner are more straightforward and easier than others. Acquiring a particular license to sell insurance, securities, or insurance, often consists of reading a book and passing an exam. By contrast, the road to CFP, CFA, or CPA designations often takes years and is comprised of formal education, an exam, and a number of hours of internship or work experience within the field.


The literature requires that a profession project a high degree of uniformity for the sake of consistency when interfacing with end clients. Financial services, broadly construed (and even financial planning) is anything but. As long as there exists too much variation in knowledge, admissions, organization, and ethics, neither financial services nor financial planning can rightly be regarded as a profession.






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