The yet-to-be-named successor to Financial Planning Association executive director and chief executive Marvin W. Tuttle Jr. will have to figure out how to get the diverse — if not unwieldy — organization, back on a growth track.
Mr. Tuttle, a 30-year veteran of the FPA, who has led the association for the past eight years, said last week at the group's retreat in Scottsdale, Ariz., that he will step down May 31, 2014.
Observers think that the FPA, which has seen a steady slide in membership, especially since the financial crisis, needs to upgrade the professionalism of its members and offer more-tangible benefits.
The organization often has struggled to define its mission and membership, following the group's formation in January 2000 from the merger of International Association for Financial Planning and the Institute of Certified Financial Planners.
From a peak of about 28,000 after the merger, FPA membership has slipped to 23,400.
Meanwhile, the number of CFPs grew right through the crisis, rising 9.2% from year-end 2008 to 64,232 at the end of last year, according to the Certified Financial Planner Board of Standards Inc.
The FPA has just 17,000 of those CFP designees as members. FPA officials estimate that about 50,000 CFP holders are actually practicing planners.
According to industry watcher Bob Veres, who publishes the Inside Information newsletter, other adviser groups, such as the Investment Management Consultants Association and the National Association of Personal Financial Advisors, have consistently increased their membership after 2008.
“The FPA is caught between a rock and hard place,” said Allan Roth, founder of Wealth Logic LLC, who is a CFP holder and FPA member.
The organization wants to appeal to planning professionals, many of whom are fee-only, but the FPA has to be neutral regarding compensation models, he said.
“If the FPA wants to increase membership ... they have to be open to everyone, from those who are very [fee-only], to those who sell annuities,” Mr. Roth said.
Mr. Veres has blasted the FPA's reliance on product vendors for revenue and for not becoming the professional-centric organization that he thinks was promised in the wake of the merger.
That dichotomy has simmered for the dozen years since the merger, as the planners who dominated the ICFP clashed with the brokerage industry members of the IAFP. Broker-dealer members were later spun off to form the Financial Services Institute Inc.
"VALUE PROPOSITION'
“For the first decade, it was basically integrating [the two organizations] into a common mission,” said FPA president Paul Auslander, chief executive of American Financial Advisors Inc.
“We're not a regulatory body or a certifying organization. We're a voluntary organization, so we have to have a value proposition,” Mr. Auslander said.
So what is the value that will attract members?
“That's a question we ask a lot,” said Eric Toya, vice president of Trovena LLC, who is the chairman of the FPA's member benefits advisory council.
“It comes down to two things: The "what's in it for me?' factor, and professional benefits” such as networking, he said.
Planners have many ways to network outside the FPA, Mr. Toya said, and the group's investor referral service, a key tangible benefit, has been “hit or miss.”
A strategic review last year found that members wanted a renewed focus on promoting the CFP mark, as well as practice management help, FPA officials said.
To better promote the CFP designation, the organization will be creating three membership categories: the “CFP professional” for CFP designees, the “financial services professional” for members with other designations, and the “allied professional” for other types of professionals.
The organization is also working on providing practice management services and additional benefits, such as a health care plan for members, Mr. Tuttle said.
As for his successor, “I can tell you it will be someone with financial experience, with some association expertise, and I wouldn't be surprised to see someone who's fresh, from [outside] the industry,” Mr. Auslander said.
A search is expected to begin this year or early next year.
djamieson@investmentnews.com
