Journal of Financial Planning: July 2020
Kevin R. Keller, CAE, is CEO of Certified Financial Planner Board of Standards Inc.
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The first half of 2020 has been unlike anything we could have anticipated, or frankly, even imagined. The COVID-19 pandemic has challenged us all as we have sought to protect our families, our livelihoods, and our communities.
The virus has not affected us all in the same way. Millions of Americans have lost their jobs due to the pandemic. Others have been fortunate to continue to work and retain their income. What has been constant during this period of economic uncertainty and market volatility, however, is the fact that more people are reaching out to financial advisers for help.
Filling a Critical Need
A recent survey by CFP Board revealed that nearly 80 percent of surveyed CFP® professionals received more inquiries from current clients as the COVID-19 pandemic has evolved, while another 34 percent reported an increase in inquiries from prospective clients (see the April 2020 Pulse Survey results at cfp.net). These CFP® professionals are filling a critical need by helping their clients to understand what is happening in our economy, avoid panic-driven decisions, and make sound financial choices for themselves and their families.
Ensuring that quality financial advice is available to every person who needs it, especially during these unusual and trying times, is critical for our country’s financial well-being. Helping more Americans afford this crucial service is key to that effort.
Calling on Congress
CFP Board recently joined with several financial services associations, including FPA, to call on Congress to restore and expand the deductibility of fees paid for professional investment and financial planning advice.
This tax deduction was repealed in 2017 as part of the Tax Cuts and Jobs Act. At the time, the deduction’s repeal may have appeared inconsequential: the stock market was rising, real wage growth was slowly increasing, and we were seeing sustained job growth. But when the coronavirus pandemic hit, millions of Americans—including many near retirement—watched the money they worked so hard to earn and to save evaporate virtually overnight.
The importance of making sure Americans have affordable access to competent, ethical advice now and in the foreseeable future has never been clearer. Restoring the previous tax deduction gets us part of the way there—but lawmakers must also allow more people to qualify for the deduction. For starters, lawmakers need to clarify that fees for financial planning services qualify for the deduction. At the same time, CFP Board and our association partners believe the tax deduction should be made available to all taxpayers, and not just those who spend a certain percentage of their income on advisory fees.
We know there are opportunities outside of the policy arena to make financial planning services accessible to more Americans. Many CFP® professionals are already offering pro bono financial planning services to elderly individuals, small business owners, and low-income workers through the Foundation for Financial Planning’s (ffpprobono.org) Volunteer Match platform. CFP Board is also working to educate more Americans about financial planning and the advisory options available to them. It is important for people to know that they do not have to feel overwhelmed by their finances and muddle through the economic crisis on their own.
We are doing our part, through these and other efforts, to ensure everyone has access to competent and ethical financial planning advice. Now it is time for lawmakers to do theirs.
We must be able to meet the demand for personal financial advice at any time, but it is even more crucial in times of crisis. CFP® professionals are very much part of the front line responding to the COVID-19 pandemic’s financial fallout. They may not be in the headlines alongside healthcare, food, government, and other professionals, but their services are nevertheless important to the financial and emotional health of millions of Americans.