Financial Advising Needs to be a Profession. Period.

What does a profession entail? At first glance it may be difficult to differentiate a profession from another occupation. But, to paraphrase United States Supreme Court Justice Potter Stewart, we know a profession when we see one. So, let’s look at three of the most common professions to find out what it may entail: accounting, law, and medicine. To name just a few of their commonalities, they all require:

•  Advanced degrees;
• A license to practice;
• Membership to an association; and
• Continuing education.

However, and perhaps most important, all three occupations have the potential to do great harm to the consumer. A CPA that files a tax return incorrectly has the potential to cost their client thousands to hundreds of thousands of dollars. A lawyer who fails to uphold the profession’s standards could cost their client money, time, or their freedom, while a negligent doctor could cost the patient their life. It makes sense why these occupations require such stringent standards; it’s in the best interest of the public. So why do we allow such lax standards when it comes to the management of our money?

It doesn’t take much to become a financial advisor. If someone wants to join this career, they don’t need an advanced degree nor a license to practice. They don’t have to belong to an association nor obtain continuing education. But nonetheless, it’s an occupation that may do great harm to the consumer. The wrong investment advice or financial strategy could cost the consumer their entire life savings, their livelihood. Depending on the firm, all a new advisor must do is pass a couple tests, latch on to an employer, and start cold calling. This barrier to entry is entirely too small. We as an occupation should demand this same level of expertise from our colleagues. We should be a profession.

Now, I believe there are some wonderful advisors out there who may not meet the above criteria, but I think we need to have an open dialogue about what’s best for our clients. While I’m young, I come to this career with a passion for helping others. I studied accounting for 4 years (though obtaining enough education for 5), passed the CPA exams, taken advanced tax classes, passed all seven financial planning classes for the CFP, worked in large firms and small, with sophisticated clients and simple clients, and I still feel apprehensive about my ability to help clients. I can’t imagine walking into a room without advanced study in the field, and just a couple quick exams under my belt, to try and sway someone potentially 50 years older than I am to trust me with their money.

Our clients and the public in general deserve to trust their financial advisors. Too often we hear “I hate financial advisors; they are just salespeople.” We’re all aware of the negative impact bad financial salespeople have on our occupation. Without a clear delineation between a financial salesperson and a financial advisor or planner, we can’t expect to gain the reputation and trust that accountants, lawyers, and doctors demand. How then do we go about making our field into a profession?

First, I believe it starts with colleges. We’ve seen an increase in the number of colleges offering financial planning degrees, but it should become a de facto major in most colleges. Akin to accounting or finance. And we shouldn’t just require seven classes to pass muster. Accounting and finance majors are often required to take 12 or more courses in their field of study before obtaining their bachelors; we need to do the same.

Second, the CFP?, should be the minimum standard a practitioner must meet to call themselves a financial advisor or planner. We should have required continuing education of all advisors. In our current landscape this is often the end point for many advisors. Having reached the growing gold standard, they feel there’s no longer a need to educate themselves. But just like accountants, lawyers, and doctors, we should hold ourselves to higher standards.

Third, we should have state-level governing associations. Groups that set the standards and practices for field. They should define the minimum requirements we should meet, the consequences for poor advice or malfeasance. These associations would ensure that only members can hold themselves out to be a financial advisor.

Finally, we should have a clearly defined career path for those wishing to enter the field. All three of the professions I’ve mentioned have this. All three occupations operate as professional trades. This structure harkens back to their earlier days when accountants, lawyers, and doctors would learn under the tutelage of a master or mentor. The proverbial master/apprentice model. Our profession should follow suit.

While it’s not an easy path, it’s a path we ought to take. Trends within the field are pointing in this direction, but we should act quickly and swiftly to raise ourselves to the same level as accountants, lawyers, and doctors. Our field brings tremendous value to consumers. We help individuals navigate the worst times and the best times of their lives. Financial advisors can simultaneously help clients when tragedy strikes and plan for a bright and optimistic future. But, just as we acknowledge the tremendous benefits we provide; we should acknowledge the weaknesses we have.

We should become a profession. We must become a profession. We deserve to become a profession.