The chairman of the Certified Financial Planner Board of Standards' board of directors said it is expecting "double the normal attrition" as a result of an 80% fee increase to fund a national public awareness campaign.
"We are planning for the worst-case scenario," Robert Glovsky, the board's chairman, said in an interview Friday. "We are worried that there will be fallout, and we are planning accordingly."
The board announced Friday that the public awareness campaign will cost $9 million annually and will be funded through a combination of funds from its reserves and an increase in fees. The CFP Board is contributing $9.3 million over two years — $7 million in 2011 and $2.3 million in 2012.
A monthly fee increase of $12 a month, or about $145 a year, which will be introduced in July, will pay the balance.
Kevin Keller, the board's chief executive, mentioned that it was considering raising the annual fee to $325 at the Financial Planning Association's annual meeting in Denver last month. Despite some criticism, the board planned to move ahead.
"Honestly, we expected a higher number of people to respond on blogs and comment on discussion boards about this," Glovsky said. "We were surprised there weren't more people upset about this."
"We are always concerned that people will say that the fees have reached a point that they can't afford it anymore. We didn't want to do anything that the vast majority of our certificants didn't support, but our surveys indicate strong support," he said.
The board spent the "better part of three and a half hours" discussing the fee increase on Thursday before unanimously deciding to move forward, Glovsky said. One major change was the board increased the amount it is paying from its reserve to support the public awareness campaign to $9.3 million from a previously discussed $6 million. "We really wanted to make the statement that this campaign is critically important to the profession."
According to the CFP Board's research, 72% of certificants surveyed said they'd pay an extra $12 a month to support the campaign. With the increase in fees, CFP certificants will now pay fees annually but still renew their certification every two years. The total annual certification fee will rise to $325 a year. The fee increase will go into effect starting with July 1. Currently, certificants pay fees every two years.
The marketing campaign has been approved to run over the next four years, with a review period at the end of the second year. The board made clear in its deliberations that for the campaign to continue, it must be successful based on established metrics that demonstrate an increased awareness of CFP certification. The resolution also states that all funds stemming from the fee increase and allocation of reserves must be dedicated to the marketing campaign.
