(Source: Boston Herald)By CHUCK JAFFE

There are dozens of definitions for “financial planning.” Theproblem is there’s no universal definition – one that counts inCongress and in every state.

A designation is now a more distant prospect. last month, theFinancial Planning Coalition – a group comprised of the CertifiedFinancial Planner Board of Standards, Financial Planning Associationand National Association of Personal Financial Advisors – backedaway from its effort to get Congress to establish a definition offinancial planning.

The decision is a victory for the insurance and securitiesindustries that rallied against it, and a loss for consumers, whocould have used the help that a clear standard would provide.

Here’s the basic issue: Financial planning is not a profession.While planners and advisers like to compare themselves to doctorsand lawyers, the truth is that they are more like plumbers and automechanics.

A profession, by definition, requires specialized training andtesting. Doctors go through years of education and post-graduatetraining before they qualify for a license; lawyers must not onlyget a law degree, but pass the bar exam. Financial planners prettymuch just have to fill out some paperwork, though the minimumrequirements vary by state.

Moreover, every time the financial-planning business suffers ablack eye, some of the providers create their own titles. They are”wealth specialists” or “financial counselors,” titles that soundgreat but have even less of a standard definition than “financialplanner.”

The coalition of planning groups was lobbying Congress to definea planner as anyone conducting two or more elements of the financial-planning process; those involved in counseling consumers on planningand organizing investments, retirement savings, taxes, collegesavings and estates would have qualified.

That would have required around 300,000 people who marketthemselves as some type of planner to meet minimal competency,education and ethical standards. it would have been a major stepfrom turning financial planning from a business where some providersact like professionals into an actual profession.

The Financial Planning Coalition suspended this effort because itwants Congress to require that all financial planners adhere to a”fiduciary standard” when providing advice. Demanding a fiduciarystandard requires that advisers actually put their clients’interests first, that every suggested move be in the customer’s bestinterest, rather than merely “suitable” or appropriate for theconsumer.

The bottom line is simple: Consumers would be better prepared todeal with the financial-planning business in all of its forms ifthey knew exactly what they were getting when they signed up with a”financial planner.”

So long as that standard is blurry, consumers can take nothing inthe planning business at face value.

Send e-mail to jaffe@marketwatch.com

Originally published by By CHUCK JAFFE.

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