To think… like a CFP®

Many of you have read this article in the FPA Journal in 1990. Many of you have even thought about it enough that you wrote your own version. We decided to create a new category on this site for these “…Like a CFP®” publications starting with this one. Let this inspire you to be the best financial planner and human you can be.

Article

In this essay, the author argues that for financial planning in general, and Certified Financial Planner recipients in particular, to become accepted and respected as a real profession and as real professionals, CFP practitioners must “think” as professionals.

This means developing a professional identity, a tradition, a common way planners look at themselves and at their relationships with their clients. Currently, argues the author, no such common bond exists.

Furthermore, instead of being viewed as a service delivery system that provides a unique and powerful role in today’s society, financial planning has been defined, by those who are not true planners, as a “tax shelter delivery system” or a “product delivery system.” To shake these false roles and achieve a true professional identity, financial planners must develop basic financial planning theory through internal debate.

**At this article’s first publication, Richard B. Wagner, J.D., CFP®, was a principal with Wagner Howes Financial Inc. He now is principal of WorthLiving, LLC, in Denver, Colorado.

Prologue: The students file past the ivy into the oak and dust of the ancient classroom. On this first day of class, they anticipate their initial steps on a professional journey that will lift them to the pinnacle of prestige, power and authority.

They understand that they are among the few…the chosen…the elite. That society will place a significant piece of its well- being in their hands is axiomatic. The successful among them will control its very fabric and participate in the destinies of thousands, perhaps millions, of their fellow humans.

They are well aware that they will deal with the most potent and versatile of forces, and, accordingly, they anticipate affecting the lives in the development of personal and public policies of the farthest-reaching consequences.

Between here and there lies a challenge beyond measure. They will be asked to learn, to apply, to become capable. There is no assured success. Many will fail.

Of all the professions, the one they have chosen requires the most demanding mixture of liberal and technical arts. To practice at its pinnacle, they must combine skills that, individually, would literally create careers in a multitude of other sectors. On the human side, they will be asked to combine an exquisite, even spiritual, sensitivity and zest for life with extraordinary aptitude. The degree of challenge notwithstanding, they are not willing to settle for a lesser calling.

Lips twitch and hands tremble as the students await the venerable Professor Koenigsfeld. He enters regally. As he surveys the unworthy assemblage slowly and with obvious scorn, he fixes his gaze to make each student feel more naked, alone, and more vulnerable than ever within the memory of each. He has sought, and found, their souls. The powers of tradition, of duty, of sacred honor, manifest themselves within the energy of his countenance, and mix with the dust and ivy.

A burst of eternity passes within seconds as the professor begins to speak in the hushed tones of educated authority. His accent exudes East Coast nobility and scorn for the pretenders before him.

“Ladies and gentlemen, you are embarking upon a journey of epic proportions. It will require all that you have to give and all that you are. You have come here with a brain full of mush. And if you survive… you will leave—thinking…like a CFP.”

Conceptualization

To practicing Certified Financial Planners, what is wrong with this picture? Does it compute? Or confuse? Does it make you jealous of what you are not and desirous of what you should and could be? Do you fail to comprehend, or simply wonder if this will qualify for continuing education credit? Is there a sense of an image encapsulating what we lack? Or what we promise? Does the picture more appropriately relate to a profession where real professionals are trained to practice and make real contributions?

Somewhere in this scenario is the basis for what our profession is striving to be, and, eventually, must become. For as CFP practitioners, we do not know truly who we are, why we are, what we do, why we do it, or how we do it. It is an intolerable incongruity that in the face of the consuming public literally screaming for competent, objective, personal financial advice, we run the risk of professional self-destruction because we cannot figure this out—what it means “To Think…Like a CFP.”

Framework

The prologue presents a reasonable facsimile of the opening scene of The Paper Chase, a movie and television series about law school. Notwithstanding dramatic effects, I assure you that this scene, or its equivalent, is emblazoned upon the consciousness of everyone who has ever attended law school. It describes exactly what happens there: You enter with a strong combination of ambition, arrogance, raw fear, naivete, and anticipation of glory, and you leave—thinking…like a lawyer.

What does it mean: “To Think…Like a…”? Lawyers know. We revel in it. It is a source of pride, of humor, of common bonds, of self-knowledge.

“Thinking…Like a…” implies and requires shared presuppositions about worth, paths traveled and roads taken, shared experiences, common understanding regarding methods of practice and the earning of money, fundamental values, the physical and emotional requirements, commonly accepted professional myths, and much, much more.

In this article, I will use the practice of law as a reference base because I understand it best among the established professions. I am a lawyer and continue to actively participate with my colleagues in the bar. I also will lean upon my personal knowledge of the medical, theological, teaching, and architectural professions. I serve the first, nearly became one of the second, worked with many teachers as a lawyer, and am married to a third year architectural student.

Common Principles Among Professions

Within the context of this intimate personal experience, I submit that fundamental principles apply to all professions on the list. In each established legitimate profession, there is a thought process that sets such a profession aside from all other forms of endeavor and the practicing professional apart from all other types of practitioners. This thought embodies what it means “To Think…Like a…”

For established professions, this thought process provides the framework for practicing the profession; for legal structure; for the development of appropriate relationships with related industries, professions, and trades; and, perhaps most important, for the maturation of profit centers and disciplinary specialties within the profession. This core is the key to the profession’s evolution and to its marketplace. With CFP practitioners, the emergence of this core will generate and accompany the acceptance of financial planning as a legitimate profession.

Please keep in mind that I am addressing “Thinking…Like a Lawyer” as a process and a professional self-image, against with we can develop our own notions as CFP practitioners. It will help to keep in mind that I have a fundamental respect for attorneys, their viewpoints, perspectives, grasps of wide ranges of information and knowledge, concepts of duty, much more that is part of their essence.

I could be accused of alleging that attorneys are arrogant. If so, I plead guilty. In my opinion, the legal profession has earned the right to arrogance and its perquisites. When we develop the concept of “Thinking…Like a CFP” to a comparable level, we, too, will be arrogant, and we will have earned this right.

Like most of us, including most other attorneys, I have had my share of negative encounters with the abusive, the small minded, those whose only interest is the sale of seemingly sophisticated legal products, with no more clue about service to clients than many who claim the status of financial planner. These individuals, unfortunately, leave their stench upon the legal profession, but they should not be thought representative.

Lawyers generally are good people to joke with, drink with, fight with, and, especially to think with.

Thinking…Like a Lawyer

Attorneys understand that they possess power—power of knowledge, skill, sanction, coercion—and a license to use this power. They fully comprehend that they terrify, intimidate, and may be disliked intensely for the power they wield. This is part of the price they pay for the privilege of their profession. What is more, lawyers fundamentally like these facts. It fits their self-image, of how they think about themselves.

Attorneys believe that what they do is essential to functional lives and orderly societies. They keep people from making big mistakes and they minimize the consequences of mistakes not avoided. In this process, they may impress many as pedantic by their use of language or simply interested in generating a large bill. Yet none are better at isolating pure intangibles, identifying hidden issues, and creating the tools to fix mistakes out of an apparent void.

Lawyers are present at the big moments—moments of beginnings and ends, joy and anguish, the creation and burial of dreams. They intimately are involved with those who truly have suffered injury; more than occasionally they also serve those inflicting injury. It is their job to advocate on behalf of the one who pays them, whether they are the inflicted or the inflictor of injury. Lawyers are inherently proud of their ability to see all views and argue all sides with equal conviction and dispassion.

This understanding is not a new one; lawyers function in an environment of extraordinary tradition. Part of thinking like a lawyer is the acceptance of this baton of tradition and, in turn, passing it along.

This commonality of tradition also leads to answers to the all-important question of how to make a living. From their understanding of how “a lawyer…thinks,” upon graduation from law school, attorneys seek their fortunes within the framework of a well-established profession. They will gravitate to big business, to government and to national political posts, to large firms, to small firms, to solo practices, to the courts, to working with the disadvantaged, to prosecuting or defending criminals, to research, to oratory, to academia, to wherever and whatever. (Some poor souls will even become Certified Financial Planners and be rewarded by unceasing abuse from colleagues about being a lawyer!) Regardless of the path taken, they will never stop thinking…like a lawyer. We see the same phenomena among physicians, the clergy, architects, and teachers.

Do financial planners have any equivalent to this commonality of tradition? How can we evolve one? Do we have any concept of our power, of where we fit into the world of what we give and what we cost? Do we understand how our profession can become a genuine career or how we will transmit that understanding to the next generation? Of how we…think?

Professions

All professions deal with the intangible necessities of life; that is, with the stuff where people need someone to provide answers for them, personally as well as communally. The classic professions are law, medicine, and theology. Additional ones might include journalism, teaching, nursing, and architecture. All have the characteristics of working with ambiguity. All integrate form and function with the mental, physical, and spiritual well-being of the individual and society, in the context of fiduciary responsibility amidst moral and ethical conundrum. In other words, they do not do what they do just for the money.

The common-law definition of a “profession” requires that a profession include:

1. an esoteric body of knowledge,
2. a minimal education curriculum
3. altruism and
4.  a code of ethics.

Webster’s Ninth New Collegiate Dictionary defines profession a bit more succinctly:
a: a calling requiring special knowledge and often long and intensive academic preparation

b: a principle calling, vocation, or employment; c: the whole body of persons engaged in a
calling.

The term “calling” would seem to be the operative word. It is partly defined as:
a: a strong inner impulse toward a particular course of action especially when accompanied by conviction of divine influence

b: the vocation or profession in which one customarily engages. I submit that these definitions establish the basic parameters of a classic definition of a profession that goes beyond merely earning a living. Specifically, a profession entails the conviction of divine influence, an altruistic motive, a strong ethical context, intense academic preparation, an esoteric common body of knowledge, and an educational curriculum.

The concept of a profession, by definition, implies infinite levels of moral and ethical dilemma on the issue ultimately of greatest importance to both society and its individuals. It presumes individuals are ready, willing, and able to live and earn in the context of fiduciary obligations, ethical uncertainty, and personal responsibility with all their extraordinary implications. It means “Thinking…Like a…”

Do attorneys understand these concepts? Indeed. Do physicians and ministers? Of course. Do the good ones agonize over answers, especially when they fail to come up with one that satisfies? Yes. Do financial planners, as a rule, use professional ethics and fiduciary obligations as a framework for their decisions and advice?

The moral legitimacy of earning a living within the context of a profession derives from a core conviction that the rules of the profession cannot be altered even if it means that a “living” might not be optimized or even earned at all. To violate this means to put oneself outside of the profession.1

Principles Over Apparent Self-interest

A true profession and its standards are important enough that its principles generally will prevail—often at the expense of apparent self-interest. Certain types of employment will be refused, certain procedures will be unacceptable under any circumstances. Financial sacrifices will be made in the course of these decisions.

However, the ultimate financial impact will be positive because consumers will know what to expect and will have made the informed decision to pay for it! Peer review and professional sanctions, even if no apparent public damage exists, are taken seriously by the active member of the profession.

With all due respect to functions served and benefits provided, life insurance sales is not a profession. Securities sales is not a profession. Tax planning is not a profession. Banking is not a profession. These endeavors are sales and functions. Each focuses on selling products that do, indeed, satisfy legitimate needs. But by inherently being outside the context of a profession, they do not have the capacity to address core issues in their entirety.

Neither do they operate altruistically or free from the bias inherent in sales, nor require a common body of knowledge or possess even a minimal academic curriculum. On their down side, they tend to turn related problems into problems their products magically solve, whether or not the products offered are the best objective solutions.

Dream

These observations are not meant to be either bitter or critical. Rather, they are the articulation of a dream—the establishment of a legitimate, new core profession.

As a profession, financial planning is young. We were conceived when the first person became “cross-licensed” with both a securities license and an insurance license. The gradual transference of our loyalty from employers/product manufacturers to our clients is stimulating our adolescent growth. But we have not yet developed the strength of purpose, self-knowledge, or the cultivated eccentricities that mark adulthood.

We can kick the cat or throw a tantrum about how we are not appreciated and how everybody calls us names, and about who is a real financial planner and who is not. But all that is meaningless. The maturation process always carries its own internal clock; respect must be earned, and will not be obtained by whining. Compared to the established professions, we literally are creating ourselves as we go about “doing what we do”—day by day, client by client, stubbing our toes, finally experiencing the awaited and deserved successes. Our potential is out in front of us and the road is relatively clear.

We may not be able to replicate centuries of tradition in two decades, but we can dream with out hindrance. Even better, we have the opportunity to actuate our dreams and take aim at our future and our legacy-to-be. The tablet upon which this profession will be written is relatively blank.

Emergence as the Essential Profession

At our core, we must identify the foundational principles of what it means “To Think…Like a CFP.” In doing so, we must remember that the proper function of the financial planner is essential to individuals and society. As with law, medicine, theology, education, and architecture, virtually every human being must address the core issues of our expertise—personal finance. The impetus to call a planner may not have the urgency of uninvited blood, our foreknowledge of personal death, or a subpoena, but individuals in this country, and now the world at this historical juncture, cannot ignore the call to tend to their personal finances.

We function in an arena that is of primary, and primal, importance to each and every person within all of civilization, in both micro and macro contexts. If we truly want to talk about concepts of earning a living and professional profitability, I respectfully suggest that we gaze upon the demand for financial competency in the Western world. It is unlimited. Then I recommend a view of the tattered remnants of the communist monolith.

Financial incompetency has brought it to its knees.

We work in the context of a commodity that affects every civilized human being, that requires unique expertise, that commands skill and competencies from the highly technical to the extraordinarily sensitive. Our work has repercussions rippling throughout the essence of our culture and society. We operate within a marketplace that literally is untapped, undefined, and infinite, a marketplace replete with humans shouting into a dark room trying to find help.

What a shame that we ever allowed ourselves to be used as a tax-shelter delivery system or to be defined in terms of our ability to place an individual with the “right” financial product. If we want to talk abominations, then consider the travesty (and tragedy) of allowing financial planning, and our counsel, to be relegated to the status of a delivery system for financial products.

When our clients have cried out for survival skills, we did not give them answers but, instead, abused them with “the latest and greatest” product, while submitting with abandon to reckless motivation of stuffing our own pockets with dollars and hoping against sound reason that our recommendations would work. Where do the examples cease as we look to the traumas engendered by our so-called industry leaders and their disintegrating resources? One national financial planning organization continues to proudly identify as a “Platinum Sponsor” an organization that defaulted on nearly one billion dollars of debt. The president of this same “Platinum Sponsor” has been allowed to proclaim at national conventions that financial planners are “after all,” just product salesman and that “We are all just in the sales business.” (Of course, even assuming this is so, some of
us have managed to avoid defaulting on a billion dollars of OPM [other people’s money], but that is another story.) Another gentleman, for many years most notably connected with a general partner who has failed to meet any semblance of its representations or projections in large number of limited partnerships and now is in the business of bottom fishing in the lake he helped fill, continues to be allowed to speak at national conventions on the “how to’s” of running a financial planning practice. This is appalling, it is nonsense, and it is unbelievably insulting to our emerging profession.

We have let these product sponsors dictate the parameters of debate and given them a forum by our focus on such issues as “fee-only” and “fee-based.” We have focused too much on the “need to implement.”

In so doing, we are in danger of defaulting our primary responsibilities as a new primary profession.

Answers and Service

The essence of financial planning is not finding a product to best fit the client’s needs. The essence is to provide answers and services within the context of the client’s own special situation. It is to “be there” for the client when financial issues arise, to answer the questions that cannot be answers anywhere else.

I suggest that the debate over commission-based planning is not that commission-based planners have harmed clients intentionally. Neither is it that commissions are evil and fees are good. Rather, the tragedy of the product diversion for both fee-only and commission planners is that it has blinded to the real implications and potential of our profession. In particular, we have neglected the development of our theory, neglected the development of how we serve. Of how we…think!

Self-Image

We must destroy the prevailing myths we carry in our own self-image, then admit our shortcomings and work from there. We as CFP practitioners have not yet refined the concept of “Certified Financial Planner,” or what it means “To Think… Like a CFP,” in order to create a professional self-perception, a common bond among professionals, or a public image worth cultivating.

We cannot contrive to scream our professionalism by wearing suits and attending so-called continuing education sessions just like real professionals when we never explore the concept of “fiduciary” in even its most rudimentary implications.

Although I have the highest respect for the College For Financial Planning, we cannot continue pretending that a mail-order education is the equivalent of a rigorous three-year residential academic program for developing a professional image or competency. Part of how a profession… thinks…is forged in the crucible of the schooling process. Having personally endured the first years of law and architectural school, I testify to their “boot camp” powers of forging raw humans into baby professionals “Thinking…Like a…” Believe me, financial planning has no equivalent.

The world will be a better place when financial planning evolves into a true profession, but it clearly will not benefit from proliferation of second-rate and frustrated would-be lawyers, accountants, investment analysts, insurance specialists, business brokers, psychologists/social workers, or whatever.

Pathetically, we still tolerate the claims of accountants, attorneys, stockbrokers, and insurance peddlers that financial planners are so dreary and insignificant that these other industries have, in fact, been engaged in our profession “for years,” though they did not know it.

Although I am an attorney as well as a CFP practitioner, I take particular umbrage at attorneys who have the unmitigated gall to attempt to define the duties of a financial planner. Their definitions have the curious tendency of including additional legal work while belittling the contributions of the planner. (In turn, it occasionally becomes our solemn duty to remind our clients and our lawyer friends with a solid sense of humor that much so-called estate planning is just expensive term life insurance.)

This attempt by attorneys to define our profession for us was never more plain than at a recent meeting of the Rocky Mountain Chapter of the International Association for Financial Planning. The attorney lecturing on the subject of “divorce planning,” a subject dealt with almost entirely from the viewpoint of an attorney and not that of a financial planner, was asked for her opinion of the legal obligations of a financial planner to a divorcing couple who had been clients. Her answer was straight lawyer-think: “You must decline representation of either party inasmuch as you have particular, privileged knowledge of each.”

Though perfectly correct advice for attorneys, it ignored the fact that the questioner was not practicing as a lawyer and that advocacy is not a financial planner’s job. If this attorneys perception of a financial planner’s duties prevails, the divorcing parties are deprived of access to the one individual most likely to have the best understanding of their financial affairs.

Must we continue to accept others’ definition of what we do? Or must we persist in allowing ourselves to be abused as gatekeepers for others? If we do, we participate in the undermining of how CFP practitioners…think. Certified Public Accountants and attorneys see financial planning as a method of client control, off-peak season employment, and a by-product of other work. Banks, insurance companies, and securities firms view financial planning as a product-delivery system.

Like the adolescents we are, we fight the shadows of self-deception, knowing neither our worth nor our limitations. As with adolescents, our misunderstanding of our worth could lead to unfulfilled promise while misunderstanding our limitations could be fatal. Like adolescents, we must remind ourselves that our promise is unlimited, perhaps spectacular.

Critical Potential

In truth, we as CFP practitioners may be members of the key profession of the future. Taken to its logical and foreseeable limits, a strong and valid genuine personal financial advisory profession with the legitimacy available through the CFP mark could loom as critical to our economic world and its attempts to survive as a single force. We work with skills essential to personal and social survival. “Might” no longer is the critical force it once was. Rather, “might” is being replaced by “money.”

As a tool of efficient conquest, money is without equal. The merchant nations are coming to rule the world with heavy checkbooks and nominal armed forces. Only third-rate countries use brute force in 1989. Real conquest is being achieved financially, and real failure is likewise.

We can view as the epitome of paradox the current world strength of Japan and most of Europe in the face of their World War II military debacles, and as a precursor of a world where money dominates. We note the irony of watching the alleged victors of World War II, particularly the communist bloc, now struggle with hopeless economies. (Since writing the first of many drafts of this article, we have been privileged to witness the unraveling of the communist monolith. Is there a stronger testament to the power of money?)

To me, this all suggests that the “might” paradigm is due for replacement by the “money” paradigm. And guess what? Money is what we do.

Identity ‘Thinking…Like a CFP’

Ironically, in the midst of this momentous change, this growing powerful demand for financial advice, we are in the midst of our own identity crisis. Fortunately, that is being countered by the massive efforts that have gone into the creation and evolution of the CFP mark from less than nothing. We are carving it ourselves out of rock, braving the beckoning sirens to hold fast to a vision of a profession with objective, comprehensive, holistic personal financial advisors.

To get even this far, we have survived tax shelters, universal life, unpredictable markets, unmitigated crooks, dilettantes, salesmen who cannot bear their own identity at cocktail parties, scavengers looking for product delivery systems, the aforementioned so-called industry leaders, and the Securities and Exchange Commission’s insistence that we really must be investment advisers—even if investments are no part of the relationship.

We should be proud. No other profession has carved a niche where none existed, as we have done. No other profession has to battle entrenched special interests of unprecedented power to merely gain purpose, as we have done. No other profession has offered intangible vision that has captured various fancies with the force of financial planning—as we have done.

Believe this: What we have to offer is unique and vital. No one else, no other industry or profession has ever devoted itself to the concept of objective financial advice for individuals that takes into account their deepest dreams, goals, and objectives. No profession but ours has related money, in all of its implications, to the highest and best interests of the consumer in the context of fiduciary duty. Others have counted, litigated, lent, sold, and cajoled, but they have not acted as personal financial advisors, as we have done.

Identity Creation

Fortunately, within financial planning circles, there is a sense of our professional potential. Among those of us who work at it for a living, I believe there is an intuitive comprehension of what it means to “Think…Like a CFP.” When we are gathered together, the pervasive message is that these arenas of “product to fit the individuals needs” are frequently of only peripheral concern to our work for any given client. Rather, it would appear that our primary work on behalf of a particular client is to meet unique financial needs, whatever they may be and however they may be solved.

Our work may range from assisting the individuals in minor issues, such as the purchase of a car or discussing child care options or proper care for elderly parents, to sophisticated issues, such as working with investment managers, hiring attorneys to litigate complicated claims, or even being hired by attorneys for our testimony in financially complicated claims. Our work may involve important negotiations, evolving a business plan, or helping a family develop a plan for caring for an incapacitated member. Minor or major, our work always will have an impact on human lives.

Develop Financial Planning Theory

I suggest that CFP practitioners have an urgent need to develop basic financial planning theory. Without underlying buttressing theory, how can we practice as a profession?

I further suggest that the basis of such theory must come from the ranks of financial planning practitioners and not from product sponsors, broker/dealers, insurance companies, allied professions, or banks, or even educators or paid staff. Most especially, it cannot come from an industry association whose primary agenda appears to be the absorption of all “financial planners” into a product-delivery network.

If we are legitimate personal advisors, we must stand, with dignity, on our own. As hospitals should not interfere with the Hippocratic Oath and major corporations should not pretend to define legal obligations and standards of practice of attorneys and accountants, neither should we as financial planners tolerate being told who we are and what we do by those who are not, and never will be, financial planners. We must do this for ourselves.

As with all theory, actual practices no doubt will be tempered by such sobering realities of the real world as the fact that financial planners must eat. Nonetheless, financial planning theory and how “To Think…Like a CFP” must emerge in a relatively pure form. Our efforts need not, and should not, result in unanimity, but should aim to reduce our work to its common elements. For example, there maybe several legitimate attitudes towards the “fee-only versus commission” issue.

While we cannot expect unanimous resolution of this and many other issues, on any level, it is fair to expect that certain issues and criteria will emerge as common and complete resolutions of legitimate boundaries.

As a result of such dialogue, I, as the small fee-oriented practitioner, may be made more aware of the shortcomings of my resources and seek methods of buttressing them, while the representative of the larger product-oriented enterprises may be sensitized to the individual client’s nonproduct needs and the implications, as a fiduciary, of certain types of recommendations. Each practitioner is thereby vitalized—as is the profession.

Endless Debates

This is the stuff of inherently endless debates. They may be infinite and unresolvable, yet there is a health and vitality in these debates that establishes a core sense of duty, obligation, and standards of practice that lend strength to all of us regardless of the form in which we practice. While the debates in no way vitiate the importance of the evolution of the concept of “To Think…Like a CFP,” one hopes the dialogue among financial planning practitioners could begin to yield benefits.

We are entrusted with helping people, exposing myths, and unraveling gimmicks. We work with the most potent and most versatile force in the history of mankind and how it relates to individual human beings. We serve a function being served by no others.

We are entrusted with the responsibility to “Think…Like a CFP.” We must accept the challenge—or lose the
charter.

Endnote

1. Now think about your colleagues. On this basis, how many financial planners are outside the profession”?
To wit:

• What percentage of the financial planners you know personally would you recommend to your mother?
• What percentage of financial planners truly will place their clients’ interests in front of their own?
• What percentage are competent to perform the kinds of financial advisory/planning services required in
  this ethical and moral context?
• How many financial planners believe they essentially are in the sales business—that if it sells it must be good?

Acknowledgment With special thanks to L.E. Howes, CFP®