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CFP® Certification at 50: What’s Next for Financial Planning?
In 1973, the College for Financial Planning minted its first class of 42 trail-blazing men and women specifically trained in the professional discipline of financial planning. Half a century later, CFP Board certifies nearly 98,000 CFP® professionals in the U.S. That number will cross 100,000 next year.
Many of the events and technological advances that shaped the last five decades would have been unimaginable to those early financial planners. And when the next generation looks back, they will undoubtedly be amazed by what’s to come in the next half-century.
Perhaps the most significant changes ahead for the financial planning profession will arise from the “Great Wealth Transfer” that has already begun and demographic shifts that will continue for the foreseeable future.
According to financial market intelligence firm Cerulli Associates, Baby Boomers and the Silent Generation will pass down $84.4 trillion in assets during the next two decades. This wealth transfer will usher in a new wave of younger consumers who will benefit from competent, ethical advice to manage these assets.
Today’s young adults are better educated than their parents and much better educated than their grandparents: Almost 40% of Millennials aged 25 to 37 have a bachelor’s degree or higher, compared with about a quarter of Baby Boomers and just 15% of the Silent Generation, according to Pew Research Center. More young adults are also aware that there are professionals who can provide advice as they think about life transitions and making financial decisions.
Younger, more educated consumers view the world differently than previous generations and have distinct goals and priorities. They gravitate to financial planners who understand them and take a holistic approach aligned with their values.
Companies like Amazon and Netflix that deliver a customized digital engagement experience have forever changed consumer expectations across every industry. Financial planners, lawyers, doctors and other professionals will continue to enhance how and where they serve their clients and patients.
Artificial intelligence and technological advances will support more informed decision-making and process efficiencies. These advances, and an ever-expanding social media landscape, will also continue to fuel the spread of bad advice and misinformation. During the coming decades, it will be critical to expand awareness around the value of working with a financial planner trained to harness the vast amount of available data and apply it effectively for each client’s unique situation.
By 2050, 29% of the U.S. population will be Hispanic, and nearly 1 in 5 Americans will be foreign-born, according to the Pew Research Center. In turn, the community of CFP® professionals who will serve the clients of the future will continue to expand to reflect the changing demographics of American consumers.
CFP Board, representing about 1 in 3 financial advisors in the U.S., welcomed 5,214 new CFP® professionals in 2022. Of these new certificants, more than 55% were under age 35. This class was also the most diverse in CFP Board’s history, with all-time highs of women and racially and ethnically diverse new CFP® professionals. The growth rate for racially and ethnically diverse CFP® professionals was 8.5%, 2.5 times the overall growth rate.
Financial planning is still emerging as a profession, and the work we’re doing at CFP Board and other organizations in the financial advice ecosystem will accelerate that recognition not only in the public eye but also in the eyes of financial planners themselves.
As the profession shifts to meet future generations’ needs, it will continue to evolve from an emerging discipline to become an established profession. With maturity will come well-defined educational pathways, a robust body of research, a vibrant culture of pro bono service and volunteerism, and widespread understanding among consumers that CFP® certification is the standard for competent, ethical financial planning.
Along with increased consumer awareness, growing recognition of financial planning as an attractive career choice among students and young people will be critical to building a diverse and sustainable workforce.
The COVID-19 pandemic not only reshaped where and how we work but also framed career and life goals for many in a whole new way. While most offices have reopened, what people demand from their working life and from employers will continue to affect every profession’s talent pipeline and future growth. Employment in personal financial planning is projected to grow 13% through 2032, which is much faster than average across all professions. CFP® professionals enjoy benefits that are priorities for many young people: work-life balance, remote work, high pay and growth potential.
Every decade, there will be more data and advanced tools available. But just as it was in the profession’s earliest days, good advice still comes down to trust and understanding between financial planners and their clients. That trusted relationship will continue to be the cornerstone for CFP® professionals for the next 50 years.
This article was originally published on LinkedIn on November 28, 2023.
About the Author: Kevin R. Keller, CAE is Chief Executive Officer of CFP Board. CFP Board, the professional body for personal financial planners in the U.S., consists of two affiliated organizations focused on advancing the financial planning profession for the benefit of the public.