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What is a Certified Financial Planner®?

What is a Certified Financial Planner®?

Whether you’ve had a financial advisor for years or you manage your own financial plan, you’ve likely seen the acronym CFP® before, even if it’s just been in passing. So, what does it mean and why does it matter? 

What is a CFP®?

CFP® stands for Certified Financial Planner® and is a certification acquired through the Certified Financial Planner Board of Standards, a nonprofit organization that serves the public by establishing and maintaining professional standards in personal financial planning.

Because of the sheer amount of financial professionals – and the fact that anyone can call themselves a financial advisor (and many iterations) – one of the CFP Board’s main priorities is to provide a certification that is the recognized standard of excellence. With thousands of hours of practical experience required, the CFP® certification is by no means easy to achieve. And the work isn’t done once the certification is complete. A CFP® must adhere to a rigorous set of requirements, one of which is committing to the fiduciary duty to act in clients’ best interests.

While there are a number of factors to consider before choosing a financial advisor, the CFP® designation can be a helpful guide in that decision. 

Certified Financial Planner® – Quick Facts

  • 87,784 Certified Financial Planners®
  • 76.8% are male
  • 23.2% are female
  • Wisconsin ranks 19th in the number of Certified Financial Planners® available
  • There are 1,707 CFP® professionals in Wisconsin
  • CFP® certificants must prove themselves in 72 area of expertise and log thousands of hours of practical experience

Walkner Condon Financial Advisors is fortunate to have four CFP® professionals on our team, serving a variety of clients, whether they live in Madison or abroad. Below you will find more background on each CFP® at Walkner Condon and their areas of expertise. 

Walkner Condon’s Certified Financial Planners®

Jonathon Jordan is one of the Partners at Walkner Condon and a Certified Financial Planner®.  He decided early in his career that simply selling investment and insurance products did not offer the full value of what a financial advisor should provide to their clients.  After going through the rigorous coursework and classes, he began using this wealth of knowledge to help the clients he was already working with as well as many others since.  He works primarily with families and businesses on their long-term goals such as retirement planning, college savings, estate planning and other philanthropic goals. He is giving back to the financial advisor community by becoming a CFP® mentor for others that have decided to work towards this esteemed credential. Link to Jonathon’s no-cost, no-obligation initial “fit” meeting.

Mitch DeWitt works with individuals and families looking to devise a plan of attack for their financial goals as well as an execution strategy. Typical clients of Mitch’s include those in technical fields such as engineering, software development and programming, or healthcare, among others. Clients seek Mitch’s advice when they are looking to come up with a charitable gifting strategy, how to approach sizable positions of stock that they have obtained through their employer’s stock plan, or when they want to learn more about sustainable investing strategies. An engineer by background, Mitch enjoys being thorough in all stages of the planning process. Link to Mitch’s no-cost, no-obligation initial “fit” meeting.

Stan Farmer, J.D., is the Director of International Financial Planning for Walkner Condon’s International Group. Stan works with a wide variety of cross-border families, including American expat individuals and couples working, retired, or semi-retired abroad. Many client families have multiple nationalities represented (for example, a U.S. and a non-U.S. spouse with dual national children), while other clients are foreign non-U.S. persons who have financial assets in the United States and, in most cases, other countries as well.  These clients present complex financial planning challenges that Stan endeavors to help them identify and overcome. Traditionally, a CFP® becomes an expert in helping clients navigate the myriad of technical tax and estate planning rules in the United States and in their particular state of residence. For Stan’s clients, these U.S. rules still apply (because the U.S. is unique in its approach to taxing its citizens regardless of where they reside), but there is usually a whole other set of foreign (often very different, sometimes conflicting) rules that apply his clients because they are residents and often domiciles of another country. Stan develops financial plans for clients that consider each client’s unique and overlapping tax exposures and recommends strategies to enable these cross-border clients to achieve their financial planning goals in a globally tax-compliant and tax-efficient manner. Link to Stan’s no-cost, no-obligation initial “fit” meeting.

Challenges, Additions and Optimism: Where Walkner Condon is Going

Challenges, Additions and Optimism: Where Walkner Condon is Going

The story of 2020 is yet to be over, but it will be a year that will never be forgotten. We have faced some of the greatest challenges as a company, namely the battle that the co-founder of our namesake, Nate Condon, has undertaken. As his winding road towards recovery has taken its twists and turns, we are happy to report that he has improved from a rather grave position just a short six weeks ago to improving metrics and hopefulness that a serious but necessary surgery will finally be the answer to long-term health. There is one major surgery in Nate’s future that is expected to ultimately get him better, and we anticipate a full recovery.

We will have answers in the next couple of months on how long this journey will take, but his strength and resolve have been awe-inspiring. And speaking of awe-inspiring, the way Sylina, Nate’s wife, has taken on the role of full-time caregiver during this process has been the most incredible example of true, selfless love and devotion. Nothing reveals the core of a person or a relationship like these types of sudden, life-changing events, and the whole Condon family has proven to be solid as a rock. The Walkner Condon team is certainly happy to have our rock back, as Nate’s strength and nutrition has improved, and he has been able to become involved again in our weekly meetings. 

Despite these unforeseen challenges, we still have a job to do. Jon, Mitch, and Keith have thrived under the virtual meeting environment, and we have collectively worked to enhance the client experience through technology. Each day as clients become more adjusted to the nuances of working together online, the process gets easier to navigate and more personal. We have recently purchased software that will further assist us in gathering and sharing personalized data with secure document sharing. This will also help us conduct our strategy meetings through a more efficient way by getting updated client information prior to our appointment. 

In late August, we had another unforeseen development when Stan Farmer and Syl Michelin began discussions about joining us as financial advisors. It was a natural fit with Keith previously working with these two talented individuals. And, at the two months+ mark of tenure, we can report that they are indeed excellent at what they do, as well as great fits for the “comfortably unique” office culture we all enjoy so much. And we would be remiss to not mention Hannah’s contributions during this time, as she has been instrumental in Stan and Syl’s success in onboarding. Her positive attitude and ability to offer a trusted perspective on many topics is invaluable. 

The interesting thing about change is that it is unyielding and unrepentant, but it is your choice whether to embrace it or allow it to become a barrier to true progress. Even “good” change can be a painfully uneven experience, but regardless of what iteration of change you face, it forces you to look inward and accept your own limitations. For me, it is the understanding that I cannot be all things to all people, and that I will simply never be good at all things. Even things I enjoy doing, I realize that a true specialist is far better suited for than someone that dabbles. 

Resultantly, two new employees have recently joined us and we will be embarking on a new venture with the goal of expanding our service level to our clients. Dan Corcoran, marketing and social media specialist, was added to our team with the goal of telling our story and increasing our engagement and communication. We believe that being “comfortably unique” is our secret sauce, and adding staff that can help us get this message out is incredibly valuable.

Next, Anna Lautenbach is a highly credentialed financial advisor that will also be assisting us with compliance responsibilities. She also will be partnering with us to establish tax services as a new entity. We believe that we can offer the same customized, friendly experience on the tax consulting and preparation side to compliment our investment management and financial planning services to both Wisconsin-based and U.S. expat clients. We intend on carrying forward our prompt response time and ease of doing business, and offering clear and concise advice from Walkner Condon Financial Advisors to Walkner Condon Tax Services.

On behalf of the partners, Nate and Jon, we look forward with optimistic eyes and hearts. We are humbled by our clients’ genuine care for us as a group. We exist because of all of you, and we will tirelessly strive to make your experience with comprehensive wealth management an exemplary one.

The future is bright.

Clint Walkner

The Winding Road to a Universal Fiduciary Standard (Or Not)

The Winding Road to a Universal Fiduciary Standard (Or Not)

When one visits the doctor, it gives great comfort to know that the physician has taken the “hippocratic oath” to do no harm, and always put the patient’s needs first. If a specific treatment option, prescription, or advice were given because a doctor had been financially incentivized to do so, it would be a betrayal of that oath. It would erode trust, and irreparably harm the doctor-patient relationship. In financial services, however, there is no hippocratic oath. Over the past few years, we have seen efforts to delineate who is actually a fiduciary and what the responsibility of an advisor is to their client. Here, we take you down a review of what has transpired out of the recent regulatory changes and how it may impact financial professionals and their clients in the future. 

Investment Advisers Act – The Beginning

The Investment Advisers Act of 1940 established regulations on investment advisers. It states who needs to be registered with the Securities and Exchange Commission (now firms with over $100 million in assets under management), as well as the role and responsibilities of investment advisers to their clients. Current regulations have been built on top of this legislation in an attempt to modernize how advisers interact with their clients, as well as the expectations of a certain level of care and limits to conflicts of interest.

DOL Fiduciary Rule – The First Attempt

In 2015, President Obama made it clear that he supported rulemaking that required retirement advice to follow a fiduciary standard. His administration tasked the Department of Labor to develop a framework to establish rules, which involved an extensive amount of feedback from financial advisors, the general public, and the regulators. Out of this came the DOL Fiduciary Rule in 2015, to be implemented in 2016. The rule required advisors to disclose any financial compensation from outside sources due to their recommendations, put their clients’ needs first in all advice, and seek to avoid conflicts of interest. This included receiving commissions, 12b-1 fees (trails paid by mutual fund companies to the advisor or firm), receiving “referral fees” and required any fees collected to be a “fee for service” or an “asset management” fee that was not dependent upon the advice rendered. 

This had a potentially massive impact on 401(k) plan advisors, which were not required to be fiduciaries on their plans previously if they accepted commissions and were acting as “registered representatives” (in contrast to fee-only investment advisors, who must act as fiduciaries). Additionally, the DOL Fiduciary Rule was supposed to impact IRA assets as well, which are not covered by ERISA. This was a major bone of contention, as the Department of Labor was essentially regulating a type of asset over which it arguably had no jurisdiction.

The DOL Fiduciary Rule was one of the first attempts to require financial advisors who received commission-based compensation and the firms that employed them to put their clients first in the eyes of the law. It was intended to help bridge the gap between the appearance of being a fiduciary and actually having to act as one. 

Just because it may have been welcomed by some in the investment advice industry and many in the general public does not mean it was a popular rule, however. Investment companies saw it as a compliance nightmare and a threat to their revenues, particularly in commission-based products. Additionally, it would have granted much greater regulatory power to the Department of Labor over financial advisors and related investment and financial advice-giving companies. There was considerable pushback as a result, and once the Trump administration became involved, the rule was in peril. The implementation was delayed multiple times and, ultimately, killed off in 2018 by the Fifth Circuit Court of Appeals.

Regulation Best Interest, Form CRS, Standard of Conduct for Investment Advisers 

After the ultimate failure of the DOL Fiduciary Rule, the SEC began their attempt to modernize regulations and disclosures in regards to broker-dealers, as well as registered investment advisors. In 2019, the SEC adopted a package of rulemaking and interpretations called SEC Regulation Best Interest, or “Reg BI”, that allowed advisors and firms to enter into “Best Interest” contracts that disclosed the conflict of interest that existed if they received any other types of compensation other than the types allowed under the fiduciary rule. 

According to the SEC, “Under Regulation Best Interest, broker-dealers will be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. Regulation Best Interest will enhance the broker-dealer standard of conduct beyond existing suitability obligations and make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer when making recommendations.”

Additionally, Form CRS became a required document for both registered investment advisors and broker-dealers. This document was designed to offer a plain English view of the services offered by the investment professional, how compensation and fees work, and any disciplinary history the financial professional has faced. To view an example of this, here is the Form CRS for our firm. 

The SEC also issued their interpretation of the standards of conduct for investment advisers (which, incidentally, is a really well-written document). The goal of this appeared to be a restatement of what is expected of investment advisers – a duty of care and a duty of loyalty. They reaffirmed that an investment adviser is a fiduciary and must act in the client’s best interest at all times. A contrast was made between broker-dealers and investment advisers in that their compensation models may be different, namely the ability to accept commissions in a broker-dealer environment, which causes a separate and distinct difference in the conflicts of interest present and the necessary disclosure.

Regulation Best Interest and Form CRS were implemented with a compliance date of 6/30/2020. The standards of conduct were effective on 7/12/2019.

Code of Ethics and Standards – The Fiduciary Update by the CFP® Board

Seeing a regulatory hole between the Investment Advisers Act of 1940 and a fiduciary standard, the CFP Board has established a set of fiduciary guidelines and rules that govern CFP® professionals. The last major update of these standards was in 2007. Around the same time of developing Reg BI, The Certified Financial Planner Board of Standards developed the Code of Ethics and Standards of Conduct. This went into effect in October of 2019 with enforcement beginning on June 30, 2020

According to the CFP Board, “This is a significant strengthening of the prior standard, which required a CFP® professional to act as a fiduciary only when providing financial planning. The fiduciary obligation includes a duty of loyalty, a duty of care, and a duty to follow client instructions. Other important changes in the Code and Standards include more detailed requirements for fully disclosing material conflicts of interest, obtaining informed consent, and managing those conflicts.” 

The most important part of this update to the rule is the expansion of fiduciary duty to act in the best interests for clients in all situations, not just during the financial planning process. For advisors that hold a CFP® designation, those that are employed at broker-dealers and insurance companies may find new challenges in meeting this fiduciary standard, particularly if they continue to sell commission-based products. 

DOL Fiduciary Rule – Take Two is On The Way

In 2018, the Department of Labor Fiduciary rule was ordered to be sent back to the drawing board to review the viability and come up with any revisions. In January of this year, the DOL sent the revised rules to the OMB (Office of Management and Budget) and in June they were announced. In a shocking move, it was recommended that an exemption that offers “a new prohibited transaction class exemption for investment advice fiduciaries.” This would allow financial advisors and fiduciaries potentially to receive compensation such as commissions, 12b-1 fees, mark-up and mark-down compensation, sales loads, and revenue sharing compensation. This would impact both ERISA accounts (example: 401k plans) and IRAs.

Under the goal of maintaining regulatory efficiency, transactions that are compliant under Regulation BI would be deemed as meeting with DOL Fiduciary Rule standard. A loophole seems to exist in the rule for insurance professionals, which sell annuities inside of retirement plans for a commission. According to the initial proposal, it appears a fiduciary relationship does not exist in a one-time transaction with no expectation of ongoing review as well as no requirements to comply with Regulation BI if one is not a Registered Representative.

As before with the original DOL Fiduciary Rule, this has come under some criticism. In an article from Thinkadvisor, “Barbara Roper, director of investor protection for the Consumer Federation of America, said the rule ‘reopens loopholes in the definition of fiduciary investment advice, making the standard easy to evade. It creates a new exemption to allow advisers to get conflicted compensation, subject only to Reg BI’s weak, non-fiduciary standard.’”

What Does This Rulemaking and Regulation Actually Seek to Accomplish?

First off – are you completely confused yet? If the answer is “yes”, you are not alone. The original DOL Fiduciary Rule by the Obama Administration was definitely a nod towards bringing more investment professionals under a more uniform fiduciary standard. As it failed and Reg BI was implemented, a more “fiduciary lite” version was put into its place. This is likely to follow when the rules are finalized for the new version of the DOL rule. 

Where this goes from here will likely depend on what happens after the presidential election, and where the regulatory winds are focused. There is a chance that this nod to increased focus on conflicts of interest and disclosure will eventually lead to a uniform fiduciary standard at some point for all financial “advisors” — meaning insurance, broker-dealer, and investment advisers. The other possibility is that we continue to see the bifurcation in fiduciary standards applied to these groups, as we have in the most recent series of rulemaking.

One thing is clear to us – the best way to insure that you are working with someone who is working in your best interest and acting as a fiduciary is to hire a financial advisor that works at a fee-only firm and does not accept commissions from the sale of investment products at any time. Additionally, working with a CFP® that follows strict standards of care may also be something that investors seek out when they are looking for a long-term relationship with a financial professional whose practice centers their financial well-being.

Clint Walkner

Jonathon Jordan, CFP®

 

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