What is a "profession?" There has been significant discourse in the financial planning community addressing the practice of financial planning and whether or not it fits the definition of a true profession.

The argument can be made that a profession has three components - a body of knowledge, an ethical standard by which that body of knowledge is applied, and a clear path through which that body of knowledge can be passed to the next generation of practitioners.

In the financial planning world, the answer is clear in regards to the first component. The second component is a work in progress, and recent economic events have solidified the importance of enforcing our ethics and fiduciary duty to our clients.

The third component of the equation requires more extensive dialogue and action. It has been acknowledged that financial planning is an applied profession comparable to law, medicine, or accounting. If so, "book knowledge" is an inadequate preparation for the experiential reality of the practice of personal financial planning. The actual client-related activities performed by the personal financial planner involve a level of trust in comparison to the doctor/patient relationship where, among many other factors, communication and well-developed listening skills are critical. It is noted the CFP® Board continues to assist academic institutions in developing methods and programs that incorporate the "soft side" of being a competent personal financial planner into the curriculum, but like those of medicine, the skills are primarily, and most effectively, developed through experience.

It is clear that the work experience requirement for CFP® certification is where these skills are most likely to be cultivated. Yet, at least one study shows that candidates for CFP® certification who gain their experiential requirements in a sales/commission based position often lack development of these essential "soft-side" skills. The majority of jobs available to graduates of CFP® programs involve sales, and the training received in these settings consists more of moving product, with less emphasis on planning and relationship development. This strongly suggests that we should consider a work experience requirement for personal financial planners conceptually similar to the graduate medical education system's medical residency program.

Brief History of Medical Accreditation

It is significant to note that the medical education system has been a work in progress since the late 19th century. In 1840, most doctors were educated through apprenticeship programs and did not attend medical school. Approximately thirty medical schools were in existence, and the quality of medical education and the practice of medicine was questionable. In 1845, a resolution was introduced to the New York Medical Society calling for American physicians to establish a nationwide professional association to regulate the practice of medicine. The American Medical Association (AMA) was established two years later. A formal code of ethical standards in the medical field was established in 1858. In 1889, John Hopkins Hospital opened the first "residency" program. The next seventy-five years were not dissimilar to the development of standards of any regulated profession; organizations were formed, they were merged, and bureaucracy was prevalent. In 1965, Congress approved the Medicare Bill and, as a result, graduate medical education was raised to the level of Public Policy. The need for focused oversight was urgent, and again was followed by years of cumbersome bureaucracy until, in 1981, the need for streamlining led to the development of the Accreditation Council for Graduate Medical Education. (ACGME).

The Match for Graduate Medical School Residency

Senior medical school students go through a competitive process known as "The Match." In the beginning of their senior year of medical school, each student applies to their preferred programs, normally between five and fifteen depending on their desired specialty. The residency programs then review the applications and selected applicants are invited to interview with the program. After the interview process, the student submits a "rank-order list" to a centralized service, the National Residency Matching Program (NRMP). Concurrently, the residency programs submit their list of preferred applicants to the NRMP. The process is blinded; both parties' lists are combined by computer, which (theoretically) creates optimal matches of residents to programs using an algorithm. "Match Day" occurs on the third Thursday of March each year. Both the student and the residency program are contractually obligated to "the match."

The Proposal

How does this relate to financial planning? The following proposition is to design an educational program that leads to certification, modeled on the graduate medical education residency program. The programs would be university-established personal financial practices, managed by "attending practitioners," or credentialed CFP® designees. The attendings would be salaried employees of the university, with appropriate incentive bonuses.

The client base would consist mostly of the underserved middle market; nevertheless, the objective is to serve all socio-economic income levels. This would include providing planning services to high net worth clients, but also helping lower income clients by offering pro-bono services. All clients would understand that they are clients of the university, and the practices would become self-sustaining by charging hourly fees and flat retainers for ongoing clients requiring asset management.

Seniors of undergraduate personal financial planning bachelor degree programs would be offered an opportunity to proceed through a blinded matching program duplicative of the matching system for the graduate medical educational residency programs.

Residents would be nominally compensated for their work. This rigorous agenda would not only lead to certification, but would also prepare the graduate for multiple employment opportunities at salary levels significantly greater than a graduate with no experience.

The Curriculum

The first year of residency will consist of:
1. Meeting with middle market clients and actively develop plans to meet the client's needs. These plans would first be presented to the upper level residents and attendings before being introduced to the clients. Attendings will supervise initial meetings and provide input on financial history taking, plan development and plan communication.
2. Learning effective use of financial planning software.
3. Attending daily presentations on financial planning topics.
4. Conducting workshops for lower income clients. This would enhance the development of communication skills in addition to raising their awareness of social and ethical problems.

The second year of residency will consist of:
1. Working with attendings on higher level client issues. They would develop plans to be presented to the higher level clients with attending approval.
2. Continued work with hourly clients and developing plans to meet their needs, although with more independence.
3. Initiating an intensive research project, which they would continue working on their third year of residency.

The third year of residency will consist of:
1. Clerkships with two different private firms, each for three months to begin their introduction into practice outside the supervised institutional setting.
2. Electives geared toward practice development and practice management to prepare residents for opening solo practices should they decide not to work with a larger firm.
3. Working with attendings on higher level client issues.
4. Finishing the research project requirement.

The Advantages

A match internship program would offer a number of advantages to the planning profession:
1. A structured experience for the future personal financial planner.
2. Providing personal financial services to those most in need and increasing the availability of planners to fill that need.
3. Centered at a research institution, the practice could collaborate with the other departments within the university system, such as:
a. The computer science department by collaborating in the development of new software.
b. The marketing and mass media communications departments by developing marketing strategies that address the public distrust, educating consumers of all income levels to the value of financial planning, and reaching the younger generation, including the students on campus.
c. The counseling and communications department by developing programs that integrate emotional well being and the financial planning process.

Vision of the Initial Program

Creating and implementing structured standards are critical to building a successful program. After development of a core curriculum, a minimum of four universities with strong financial planning degree programs would be chosen as initial educational sites. Funding will come from various sources such as the universities involved, grants from organizations promoting financial planning and grants from public sources.
Programs will start with four attendings and four residents. Residents will be added at the rate of four per year, bringing the total of all residents to twelve at any one time. As the program progresses, it is expected that funding will be self sustaining as the attendings and residents bring in more clients and continue to build the practice.

As the program is refined and the curriculum perfected, more programs can be developed. Over time, residency training will be a requirement to practice the true profession of financial planning.

Conclusion

With the knowledge we have gained from the medical residency system, we can realize this vision in a couple of decades instead of a century. A collective effort will be required by the educational system, the government and current practitioners. The effort would be a noble one, and would serve us long into foreseeable future.