The recent announcement from the Institute of Financial Planning (IFP) board proposing the merger with the Chartered Institute of Securities and Investment (CISI) has resulted in both jubilant agreement and derision from IFP members. The growing criticism centres on why 2,000 financial planners joining with 40,000 stockbrokers and investment managers represents a suitable strategic fit.
The IFP has struggled to recruit new members and to progress individuals onto Certified Financial Planner (CFP) status. With 2,000 members and just over half having achieved CFP certification, the problem of growing financial planning in the UK seems to have perplexed the IFP board. But the IFP arguably does not exist solely for its members; its aspirations are more holistic in terms of spreading the financial planning message.
The IFP blames its inability to grow on lack of resources. Stephen Gazzard, the IFP’s chief executive officer, suggests, “The root cause of the proposal [IFP/CISI merger] is the need to fulfil our strategic mission to grow the profession and this form of partnership with CISI provides the optimal solution.”
Marlene Outrim the respected former president of the IFP, is more blunt, “Membership wasn’t growing so something needed to be done if we’re going to develop in the future”. Outrim considers the IFP/CISI merger a “good match”.
Paul Armson, the financial planning outlier and the driving force of Back2Y, has also indicated the IFP is under immense pressure from the Financial Planning Standards Board (FPSB) to raise numbers and that it has threatened to remove the CFP licence. But this allegation is strongly refuted by Gazzard who says, “It would not be factual to say that such a threat has been made.”
Perhaps growth in financial planning should not be measured by the number of CFPs and the FPSB is controlling the strategy of the IFP in the UK. A possible solution is for the IFP to be autonomous, giving it scope to promote financial planning and disregard the CFP accreditation.
The importance of the CFP has been questioned, and it is arguably less important with firms implementing the International Standards Organisations (ISO) - ISO2222 for individuals and BS8577 for financial planning firms. Perhaps the IFP ought to lose its obsession with making the CFP accreditation its cynosure.
Globally the FSPB has experienced enormous growth, with the 157,000 CFP members. For context, the UK represents under 1 per cent of the CFP community. Japan has over 20,000 CFPs who go through an informal CFP process of six multiple-choice examinations, academically diverse from the exam and 100-page financial plan case study to which promising UK CFP candidates are subjected.
Financial services exams are big business, the awarding bodies’ income is dependent on students applying and passing. A switch from the antiquated UK system to a milder exam based process would encourage applications and pass rates. The existing 1,000 UK CFPs could soon be joined by many thousands of fellow CFPs who have gone through a more modest process.
The IFP board is spinning the merger. The existing IFP office in Bristol will close; it is possible the majority of staff will not relocate to London. The resulting departures and possible redundancies will mean the IFP culture is lost within the vast chasm of the CISI.
The merger appears a good option if you carelessly absorb the information disseminating from the board. Perhaps it is a decision that should be made by members after an extended period of reflection. The potential loss of brand identity, losing key IFP personal along with the potential of the CFP process being streamlined and dumbed down to encourage new entrants is too important not to take a membership vote.
Richard Bishop is a lecturer in financial services at Coventry University College and a practising regulated financial adviser
