FPA Selects Largest Corporate Sponsor As First Ever Vendor Representative To Become National Board President

Executive Summary

Over the past year, the Financial Planning Association (FPA) has been no stranger to controversy. After years of declining revenues and membership levels and ongoing organizational struggles, the FPA rolled out its OneFPA Network initiative last November, which in effect would have nationalized its existing chapter system, centralizing all decision-making and budgetary control at the National level. Not surprisingly, given the FPA’s history of chapter autonomy and a long-standing concern that the National organization is out of touch with its chapters, the OneFPA Network rollout met with a significant backlash from members and chapter leaders, forcing the FPA just a few months later to roll back most of its planned changes.

Yet even as the FPA National organization tries to smooth over its increasingly tense relationship with its chapters, this week as the FPA Annual Conference gets underway the organization dropped the bombshell announcement that its new and incoming President-Elect and future Chair will be Skip Schweiss of TD Ameritrade, who serves as Managing Director of TDA’s Trust Company and its Retirement Plan Solutions platform for advisors. Which is significant because it means Skip Schweiss is not only not a financial planner himself (or from an advisory firm or organization that teaches financial planning, as every prior FPA president has been in the past), he will be the first-ever FPA Chair that doesn’t actually hold the CFP marks (even as FPA promotes itself as the principal membership association of CFP professionals), and the first-ever FPA Chair who represents a vendor whose business is selling solutions to FPA members.

However, even more concerning is the fact that TD Ameritrade itself has been the FPA’s leading top-tier sponsor nearly every year for more than a decade, which means that, with its current “Cornerstone Partner” $200k annual sponsorship commitment, TD Ameritrade has cumulatively written upwards of $1 – 2 million in sponsorship checks over the past decade! And while it’s not necessarily a bad thing for the Board to have representation from vendors (since vendors that serve financial planners are themselves stakeholders in the FPA and the broader financial planning community), there’s a difference between having representation on the FPA board and having a non-CFP representative of a vendor (which is ‘coincidentally’ the FPA’s largest sponsor) be the President of the entire organization (that can influence, amongst other things, its policies with vendors that FPA relies upon for its financial viability).

And if that apparent conflict of interest weren’t enough, perhaps most problematic is the reality that TD Ameritrade has a history of lobbying on regulatory issues in a manner that directly opposes the FPA’s own advocacy for a uniform fiduciary standard for all investment advisers and broker-dealers providing financial advice. In fact, earlier this year, TD Ameritrade went so far as to threaten to discontinue offering services in the entire state of Nevada if the state imposed a uniform fiduciary duty on its brokers… a uniform fiduciary duty that the FPA directly supported along with the rest of the Financial Planning Coalition in its own public comment letter.  Which means that, after spending a cool $1 to $2 million in FPA sponsorships over the past decade, TD Ameritrade now has one of its executives in a position to strongly influence the direction of FPA’s advocacy efforts that have a history of conflicting with TD Ameritrade’s own business interests! If the future CEO of TD Ameritrade someday calls Skip Schweiss and asks him to dissuade FPA from advocacy for a fiduciary standard that harms TD Ameritrade’s retail business interests, how exactly is Schweiss supposed to handle that conflict if his job is on the line?

Putting aside these deeply concerning conflicts of interest between FPA’s board leadership and TD Ameritrade’s executive representation, it’s also notable that the FPA’s decision means, for the first time ever, the majority of its Executive Committee will consist of non-practitioners with no leadership experience within the FPA’s local chapter system. Just as the FPA National organization struggles in its chapter relations in the wake of the failed OneFPA Network rollout. And more broadly, of the newly elected slate of Board candidates, only two members even have CFP certification, one of whom is an international representative whose CFP marks are based in the Netherlands (and may not be valid here in the United States, which would actually mean the FPA no longer has sufficient representation of CFP professionals on its Board of Directors to meet its own Bylaws requirements!).

Perhaps the upcoming restructuring of the Nominating Committee, of which half will be comprised of FPA chapter leaders going forward, will provide a good first step towards unwinding some of the FPA’s recent missteps… except given that the FPA National Board has still retained the right to veto chapter leaders from the nominating committee, to veto nominees that chapter leaders select for the board, to substitute its own candidates and override the nominating committee anyway, while stacking the nominating committee with the President-Elect and President in all the meetings and the National Chair presiding over the nominating committee and casting its tiebreaker vote over chapter leaders… it’s still not clear that the FPA is even serious yet about really adopting a more “participatory governance” structure in the future?

Ultimately, though, the key point is simply that if the FPA is going to get back on track and growing again – recognizing that if the FPA merely maintain its market share of CFP certifications since it was first formed, it should have over 50,000 members today, instead of barely 23,000 – it desperately needs to focus on the real needs of its chapters and the 60,000+ CFP professionals who are not currently members… and it’s hard to see how that goal will be achieved by reducing chapter leadership experience on its Executive Committee, and reducing CFP representation amongst its entire Board, even as the FPA continues to try to grow an 86-chapter system while holding itself out as the principal membership association for CFP professionals.

Michael Kitces

Author: Michael Kitces

Team Kitces

Michael Kitces is a Partner and the Director of Wealth Management for Pinnacle Advisory Group, a private wealth management firm located in Columbia, Maryland that oversees approximately $2.0 billion of client assets.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

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#OfficeHours with @MichaelKitces

Welcome everyone! Welcome to Office Hours with Michael Kitces!

For today’s Office Hours, I want to talk about the big news that just came out yesterday from the national conference of the Financial Planning Association, which is underway this week.

The big news is that the FPA just announced its new slate of National Board members, including its new incoming President-Elect and future Chair… which will be Skip Schweiss of TD Ameritrade, who leads their Trust Company and their Retirement Plan Solutions business for advisors. Which is significant because it’s not only the first time in its 20-year history that the FPA ever elected someone who does NOT hold the CFP marks to be the leader of the organization that holds itself out as the principal membership association for CFP professionals… but it’s also the first time the FPA has ever elected someone who is not a practitioner, or from an advisory firm, or someone who teaches financial planning, but a vendor that sells to financial advisors… and who writes very large sponsorship checks to the Financial Planning Association itself.

In fact, even as the FPA announced at its Annual Conference that Schweiss from TD Ameritrade will be the FPA’s new incoming President-Elect and future Chair, it is also highlighting TD Ameritrade as one of just two “Cornerstone Partners” of the Annual Conference. Which is FPA’s top sponsorship tier for the entire organization.

For those who aren’t familiar, Cornerstone Partnership with the FPA is a $200,000 sponsorship package according to the FPA’s own Sponsorship Kit. That’s the biggest sponsorship check that any organization can write to the FPA. And TD Ameritrade actually has a more-than-10-year history of being FPA’s lead top-tier national sponsor almost every year since the mid-2000s. Which means cumulatively, I believe that TD Ameritrade is at least one of, if not the single largest cumulative sponsor that the FPA has had for the past decade – spending upwards of one or even two million dollars on FPA sponsorships.

And now, suddenly, ‘coincidentally’, for the first time in the FPA’s history… TD Ameritrade gets the first ever non-CFP vendor representative to be selected to be the future Chair of the organization.

TD Ameritrade’s Advocacy Agenda Conflicts With The FPA On Fiduciary Interests

Now I think it’s important to point out that I’m not necessarily opposed to having representatives from industry vendors be involved in the Financial Planning Association, including at the Board level. The reality is that as financial advisors, we DO need vendors that provide us with the products, platforms, and services that we use to run our businesses and serve our clients.

And vendors that support financial planning ARE stakeholders of the Financial Planning Association. That’s WHY the FPA’s Bylaws specifically state that a minimum of 75% – but a minimum of only 75% – of its Board members must be CFP professionals.  However, there’s a difference between having a vendor representative be a member of the board, and a non-CFP vendor representative becoming the future President of the entire organization. Especially when that vendor also happens to be the FPA’s biggest financial sponsor. And ESPECIALLY when that vendor lobbies for advocacy positions that directly conflict with the FPA’s fiduciary advocacy efforts, as TD Ameritrade has done!

A case in point example is just earlier this year, when Nevada issued the draft regulations for its new state fiduciary rule, and invited public comments. For those who aren’t familiar, the basic gist of the Nevada rule is that it would apply a uniform fiduciary standard to both RIAs, AND to representatives of broker-dealers who provide investment advice to clients. This is the exact uniform fiduciary standard that the FPA and the Financial Planning Coalition have advocated for, for more than a decade now.

In fact, the FPA has spent several years gearing up state-wide chapters in large states like Florida and California, specifically to get involved in state advocacy efforts to advance a uniform fiduciary duty at the state level, and the FPA’s website in its advocacy priorities explicitly states that “FPA supports the adoption of appropriate uniform regulation of financial planners that includes a mandatory fiduciary standard of care for ALL professionals providing personal financial planning advice.” Accordingly, when the Nevada rule came out, the FPA along with the rest of the Financial Planning Coalition submitted a public comment letter supporting Nevada’s fiduciary rule as being consistent with the Coalition’s longstanding advocacy for a uniform fiduciary standard for investment advisers AND broker-dealers.

By contrast, when the Nevada fiduciary regulations were announced, TD Ameritrade not only opposed them in their public comment letter, but specifically stated that they thought it was important to maintain “two distinct business models” to serve investors – i.e., NOT a uniform fiduciary standard for all advisors – and even went so far as to threaten to discontinue offering services in the entire state of Nevada if the state went through imposing a uniform fiduciary duty on its brokers. Furthermore, TD Ameritrade explicitly emphasized its support for the Wall Street lobbying organization SIFMA, which itself suggested that Nevada should put aside its rule and defer to the SEC’s Regulation Best Interest… that also did NOT impose a uniform fiduciary rule on RIAs and broker-dealers that FPA advocates for and instead as we now know, is allowing broker-dealers to largely continue its conflict-laden business model as usual.

In other words, the FPA has been a strong supporter of a uniform fiduciary duty for investment advisers and broker-dealers. In 2004, it spun off its entire broker-dealer division to become what is now the Financial Services Institute just so it could take a focused lobbying position on uniform fiduciary standards for advisors and sue the SEC back at the time. TD Ameritrade, as a retail broker-dealer that runs alongside its RIA custody business, has actively opposed a uniform fiduciary duty for investment advisers and broker-dealers and instead has lobbied for separate standards for each to maintain the lower standard that currently applies to broker-dealers. And now TD Ameritrade, having spent a decade being FPA’s largest sponsor writing the biggest checks, now has one of its company representatives as the future President of the FPA in a position to directly influence FPA’s advocacy efforts that have been opposing TD Ameritrade business interests.

Now to be fair, TD Ameritrade’s INSTITUTIONAL business for advisors – its RIA custody unit – has generally been supportive of the advisor community, and Skip Schweiss himself is known as a fiduciary advocate, and his work in TD Ameritrade’s Retirement Plan Solutions business is largely aligned to a fiduciary duty already, albeit under ERISA. TD Ameritrade is a large company, and it’s fair to recognize that it may support advisors in its institutional division, even as it competes against advisors with the advice provided by TD Ameritrade’s retail brokers.

HOWEVER, at the end of the day… the FPA from the 2000s sued the SEC when it issued a rule that undermined uniform fiduciary advice, while the FPA of today mysteriously punted on Regulation Best Interest and failed to challenge the SEC this year in the biggest fiduciary advocacy opportunity of the decade just as TD Ameritrade’s representative was being evaluated by the nominating committee for Board leadership.

And while the FPA has been active at the state level… well, what happens if next year there’s another state fiduciary proposal that would impose a uniform fiduciary duty on investment advisers and broker-dealers, and the FPA wants to support, and TD Ameritrade’s retail division wants to oppose it?  And the CEO of TD Ameritrade calls Skip Schweiss and says “Hey, I know you’re responsible for advisor advocacy around here, but our retail brokerage business is going to take a $100M hit by that state fiduciary rule the FPA is supporting. The FPA’s advocacy is costing us a lot of money. You need to get them to back off as the President of the FPA!”?

Is Skip Schweiss really ready to get fired from TD Ameritrade if their next CEO decides to prioritize its retail division over its institutional division and advocates against a fiduciary rule that the FPA is trying to support, and pushes Skip to get FPA to change its tune? How exactly is Skip – or ANYONE – supposed to maintain their objectivity in a position of FPA leadership with that kind of conflict of interest looming over their head, with their job on the line? And if Skip and TD Ameritrade push the issue, can the FPA even afford to say “No” to the organization that’s become their biggest national sponsor in addition to being the President of the National Board?

Can FPA’s Executive Committee Execute The OneFPA Network With A Majority Of Non-Practitioners Without Any Chapter Experience?

Beyond the deeply concerning conflict of interest that the FPA’s national board now faces with a future President from a vendor organization that has actively opposed the FPA’s own advocacy agenda, the second concern about the FPA’s newly announced leadership is that it means, for the first time ever, the majority of its Executive Committee will be comprised of non-practitioners who also have no leadership experience with the FPA’s lifeblood – its local chapter system.

As the FPA’s rising President who will precede Skip Schweiss in leadership is Martin Seay, a professor and the Program Chair for the Kansas State University Financial Planning program. Who has a strong reputation for being a sharp and level-headed guy… but is someone who, like Skip Schweiss, and UNLIKE almost every other FPA president that has ever preceded them, has no history of being a chapter President before becoming the National President of the Board.

Now again to be fair, I don’t really think that EVERY leader of the FPA has to be a chapter leader before becoming a national leader – although that has been, by far, the most common track to national leadership. But these are uniquely difficult times for the FPA. As it was less than a year ago that the FPA first announced its ill-fated OneFPA Network initiative that would have unilaterally taken over and dissolved all 86 of its chapters and forcibly nationalized them.

Except the initiative was SO out of tune with the actual needs and desires of the membership and the chapters, that the FPA National leadership faced an immense backlash, such that despite announcing the OneFPA Network as an already done deal at its Chapter Leadership conference last November, just a few months later the FPA had to retract the entire initiative and instead walk it all the way back to a “beta” test where they’ll try just some of the things proposed in the OneFPA Network, and then maybe sorta might end out bringing the OneFPA Network back to the table around 2022 or so.

And so even as the FPA is reeling from the National leadership putting YEARS of energy into its OneFPA Network proposal, only to have it struck down by chapter leaders who said FPA National was out of touch with their needs… FPA National now responds with a second year in a row of electing a President that has NO CHAPTER EXPERIENCE?

How is this POSSIBLY going to help the FPA National leadership get better in touch with what the chapters want and need, when the Executive Committee just has less and less representation from anyone who actually has chapter leadership experience and can connect with the membership? Especially since the FPA not only expanded its Executive Committee to include its first non-CFP vendor and become 2/3rds leaders of an 86-chapter organization despite having no chapter experience themselves, but it’s also notable that the newest slate of National Board members includes several more non-CFPs that further move the FPA away from its stated purpose of being the principal membership association for CFP professionals.

As a result, the FPA National Board retired out 4 CFP professionals, and replaced them with two non-CFPs and only two CFPs. And one of the two CFPs is an international representative, whose CFP certification is actually from the Netherlands and isn’t valid in the US.

Which is notable not only because it means the FPA added only one CFP practitioner to its slate of four new Board members this year, but also because if its international member’s CFP marks aren’t valid here in the US, the FPA’s National Board is no longer at least 75% CFP, and the FPA may actually be in violation of its own Bylaws for failing to maintain the required representation of CFP professionals.

And this even as the FPA’s representation of CFP professionals across the country falls to an all-time low. When the FPA was formed 20 years ago, its membership included more than 50% of all CFP professionals. By 10 years ago, it was down to only about 30% of CFP professionals who were FPA members. Now the FPA is about to fall below 20% of CFP certificants who are FPA members.

In response to the reality that the FPA is so out of touch with its chapters that they repudiated its OneFPA Network initiative, and is so out of touch with the needs of CFP professionals that its market share had dropped by more than half… its solution is to REDUCE chapter leader representation on its Executive Committee, and to REDUCE representation of CFP professionals on its National Board?

Maybe FPA has a ‘master plan’ about how a broader diversity of views from non-chapter leaders and non-CFP professionals will suddenly give it insight in how to better connect with its chapters and the more-than-60,000 CFP professionals who aren’t members… but, well, call me skeptical.

Is FPA’s New Nominating Committee Structure Too Little Too Late?

Now perhaps the greatest irony of all these concerns about the FPA’s latest slate of National Board members and leadership is that the organization IS in the midst of changing its Nominating Committee structure, an aspect of the original OneFPA Network proposal that IS still on the table to be implemented this year.

Under the OneFPA Network proposal, the National Board’s nominating committee would shift from its current structure, where the National Board can populate the entire committee with its own National Board members – which some have already criticized as a very insular and self-perpetuating group – to a structure where half the Nominating Committee will be comprised of FPA chapter leaders from the FPA’s new OneFPA Council, and only the other half will be designated directly by the National Board. And I can’t help but wonder if THIS is still the Board slate, of non-CFP Board members and non-chapter-experienced leadership, that would have been chosen if the chapter leaders had more of a hand in the nominating process for National Board leadership.

Unfortunately, though, the chapter leaders never got a chance to contribute this year, as even though the OneFPA Council is being formed and is supposed to convene for the first time next month at the Chapter Leaders conference, in August, two months ago, the FPA modified its own Bylaws to require that its Nominating Committee must have been appointed at least 180 days prior to the Board elections… which by the stroke of a pen made it impossible to actually include the new OneFPA Council’s feedback in this year’s Board nominees because 6 months prior would be back in February, and back then the FPA was still in its “deciding” phase of whether it was going to move forward with the OneFPA Network initiative or not, due to the huge backlash at the time.

And at the same time in August, the FPA also modified its Bylaws to permit the current President to become a non-voting member of the Nominating committee when previously the President was excluded, which limited undue influence by current leadership on future leadership choices. And that’s on top of the Bylaws stipulating that the FPA Chair will be the Chair of the nominating committee AND its tiebreaker vote, and maintaining a rule that the FPA President-Elect gets to be a voting member of the committee as well. Furthermore, with the new Bylaws, the National Board still explicitly reserves its right to approve – or disapprove, and effectively veto – whoever the chapters select as their chapter leader representatives to the nominating committee, AND reserves the right to approve or veto any candidate the nominating committee selects, AND reserves the right to just go off script and choose its own candidate that wasn’t proposed by the Nominating Committee in the first place.

Which means even as the FPA has publicly emphasized that it is changing its Nominating committee to better incorporate the feedback of chapter leaders in a “participatory governance” structure… it’s actually been engineered to have veto rights to any nominating committee member the chapters select that the National Board doesn’t want, veto rights to any candidate the chapter leaders DO select on the nominating committee, and the ability to choose entirely new candidates outside of who the Nominating committee selects, all while stacking the ENTIRE existing Executive Committee in the room with the Nominating Committee, including the Board Chair as the Chair of the committee with the tie-breaking vote… so, frankly, it’s still not really clear to me whether anything is actually going to be different with the FPA’s leadership selection process in the future.

And of course, with the FPA’s latest set of changes to the Bylaws, there was nothing about a conflict of interest policy in selecting a representative from your largest sponsor who also happens to be actively opposing your own organization’s advocacy positions from then being selected as the incoming President-Elect and future Chair of the organization.

To be fair, the FPA does have an existing Conflict of Interest policy, which states that FPA leaders shall “avoid placing, and avoid the appearance of placing, one’s own self-interest OR any third-party interest above that of the FPA” and that Board leaders should NOT be engaged in “any outside business that would directly or indirectly materially adversely affect the FPA”. But I guess a requirement that FPA Leaders avoid even the appearance of placing a third-party interest above that of the FPA doesn’t apply to the FPA’s own National Board and its Nominating Committee.

Maybe that’s something we can consider changing in the future when we finally get through this OneFPA Network “Beta Test” and can refocus on what the FPA actually needs to do to get growing again under new leadership?

Now I would note through all of this that I’m not raising this concern here because I have anything against the FPA. I’m a 17-year dues-paying member of the FPA, a former chapter President, I’ve been on too many National committees to count over the years, and I’ve been a Chair for one of its national conferences. And as I’ve advocated for years, I believe that a strong FPA is absolutely essential to the financial planning profession itself. Every profession NEEDS a professional membership association, and the FPA is and has always been best positioned to take that mantle of leadership as the principal membership association for CFP professionals.

Heck, if the FPA could have just maintained the market share of CFP professionals it had when it was formed 20 years ago, the FPA would literally be more than DOUBLE its current size, would be nearly 50,000 members instead of barely 23,000, with drastically more resources to support all financial planners, and better capabilities to engage in the exact kind of regulatory advocacy for financial planners that the FPA claims to prioritize.

But if the FPA is finally going to get back on track again, and get its chapters growing with CFP professionals, a good STARING POINT would be to keep the board actually focused on CFP professionals – not reduce their representation – and to select leadership that is really in touch with the needs of the chapters and their financial advisor members – not appoint an Executive Committee that for the first time ever is 2/3rds non-practitioner and non-chapter leader, to be led by a representative from a multi-million dollar corporate sponsor that espouses opposing advocacy views.

Perhaps in the coming year the new Nominating Committee structure with the OneFPA Council, even still largely controlled by the National Board, will be enough to finally help nudge the FPA in a new and better direction with new leadership that can get the FPA growing again the way it SHOULD be growing. Or at least, for the sake of the financial planning profession, and the FPA itself, I truly hope so.

This is Office Hours with Michael Kitces. Thanks for joining us, and have a great day.

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