Kitces: A national FPA is the wrong way forward right now
For over 15 years, I’ve been a member and an active volunteer with the Financial Planning Association. I was a chapter board member for six years, during which I also served as president. I’ve participated in and led numerous national conference committees and task forces, chaired two national conferences, served for over a decade on the editorial review board of the Journal of Financial Planning, worked as a paid member of the FPA staff as the practitioner editor of the Journal, and have spoken at more than 70 of our 86 chapters and at every FPA national conference. I am, to say the least, a long-standing active supporter of the FPA.
I say all this because this may be the hardest article I’ve ever had to write. But as a loyal, active and passionate FPA member, I believe it’s crucial to step up and say something when I see the organization I love and have given so much to potentially going astray.
The FPA has trumpeted its recent OneFPA Network proposal as a vital “transformational change” for the organization, going so far as to say that the FPA will not be able to withstand the rapidly intensifying challenges in the landscape of membership associations without it, and that the organization simply won’t have the resources to survive and thrive at the current level of organizational separation between national and its 86 independent chapters.
However, a deeper look at the OneFPA Network initiative reveals that the proposed solution may be about far more than just the virtues of centralized functionality to gain greater organizational cost efficiencies and economies of scale.
Embedded in the OneFPA Network proposal is a requirement that an estimated $4 million in individual chapter reserves must be turned over to national when the chapter affiliation agreements are dissolved at the end of 2019. And while FPA has maintained that local leaders of the new chapters — which I'll call TNCs — that replace the existing independent chapter system will still have control over their local budgets, the TNC budgets will have to comply with whatever national sets as its strategic framework and initiatives, and have their budgets conform to policies set by a new OneFPA Resource Coordination Committee, whose purpose — as the name literally implies — is to coordinate resources between national and its chapters.
On this committee the TNCs themselves will have 50% representation — with the other 50% coming directly from the national board — but which will ultimately be controlled by a tiebreaker-voting Chair to be appointed directly by national.
National has also reserved its own right to alter or outright disband any of its committees at any time, effectively neutering any real sharing of power that its participatory governance structure might have otherwise provided.
And so I share the following concerns — not to tear the FPA down, but because I believe the FPA is such a vital organization for the planning profession that it would be a disservice to not share some constructive criticism about a dangerous proposal, and address the FPA’s elephants in the room.
The stated purpose of the OneFPA Network is to improve alignment between and integration of national and its chapters by consolidating what are now 86 independent chapters, plus two state councils, into a single national FPA entity.
From an execution perspective, having a single national entity provides the FPA the opportunity to better centralize functionality in key operational and administrative areas, from accounting and finance to unified technology systems and more efficient execution of HR functions for various chapter members and staff. In exchange for dissolving the individual FPA chapters as they exist today, the OneFPA Network would provide a so-called participatory governance structure whereby representatives from each TNC would participate on a new OneFPA Council that in turn would populate all the key FPA national decision-making committees.
However, while at a high level the consultant-speak of creating a “more aligned and integrated” organization that can produce “more empowered leaders” through “centralized integration” overseen by “participatory governance” sound like laudable goals, as proposed the OneFPA Network includes a number of deeply concerning gaps and potential problems regarding the true focus and motivation for the consolidation initiative in the first place.
Here I distill down what I think are the 13 key issues of concern regarding the OneFPA Network proposal:
1) Despite emphasizing a participatory governance system, the proposed governing documents of the OneFPA Network specifically retain national board–appointed chairs who can both set the agenda and retain a tie-breaking vote for national on every committee that can impact chapter financial and other decisions.
And notably, not every committee will have board-controlled chairs, just the committees that would have purview to set policies that may change the allocation of dollars between national and its chapters. This means the chapters would, in the truest sense, not be able to actually govern any key outcomes in the new participatory governance structure. Stated more directly, national specifically structures the governance of the OneFPA Network to retain control over the committees and task forces that actually matter most.
2) Further emphasizing the limited nature of any real governance or power-sharing from national to the chapters under the OneFPA Network’s participatory governance proposal, national explicitly retains the right to alter or outright disband any committees, task forces or even the entire OneFPA Council. This means TNCs lack any real governance mechanism to ensure they have any continued role in FPA governance — were a national-chapters dispute to occur.
3) Despite insisting that it is focused first and foremost on continuity for chapters, the OneFPA Network proposal bizarrely fails to provide for any actual selection process for TNC leaders in the future — given their current boards will legally no longer exist after the chapters are dissolved — never mind that the FPA national staff painstakingly created the structure, selection process and controlling chair selection process for every key national-controlled decision-making committee.
4) Though national maintains that chapters will retain control of their finances after being dissolved, in reality chapters will lose control of most of their key financial pillars. Indeed, under the OneFPA Network proposal national-controlled committees will determine the policies that all chapters must adhere to when budgeting, which could force chapters to use certain venues, only run certain types of events or even make an overhead budget allocation of 10%, 20% or more to support national infrastructure.
National-controlled committees will also drive policies regarding how national/chapter sponsorships are negotiated and how the monies will be distributed. That it’s even a question to be determined implies that chapters will not see the 100% of their local sponsorship revenues they currently receive. Furthermore, national has already acknowledged that the entire chapter dues assessment system may be restructured after the chapters are dissolved. This means chapters may face a substantial restructuring of their finances after national takes control of sponsorships and dues assessment, and formalizes new spending rules.
5) Chapters will also lose control of their oversight of their local chapter executives. National will take “significant input” from TNCs but retain national control over the actual decisions to hire and fire chapter executives — in addition to determining whether or at what size a chapter should be permitted to have a chapter execution by setting such policies under the OneFPA Resource Coordination Committee.
6) Why does national have such urgency in proposing the OneFPA Network’s effective date of barely 12 months away?
National itself has made the case that the OneFPA Network is essential for the organization to survive and thrive in the future, but as it turns out this may not simply be about the operational efficiencies of more centralized chapters, but instead literally a state of financial distress for the organization.
As the saying goes, follow the money.
Since 2008 the FPA’s conference sponsorship and Journal advertising revenues have crashed by nearly $4.5 million per year. This further raises concerns for chapters about how national and chapters will split that sponsorship revenue, especially when national is facing such significant revenue declines and controls the decision-making process for how those dollars are split. Furthermore, what kinds of incentives or pressure will the OneFPA Educational Committee exert to limit large chapter events like FPA NorCal or FPA Minnesota from further cannibalizing national’s own conference sponsorships?
7) National maintains that transformation is necessary to navigate the current landscape challenges that modern associations face. Yet in practice, NAPFA, IWI and the AICPA PFP associations have all grown their memberships by more than 50% since their pre-crisis highs, even as FPA has declined by 15%. What’s more, the CFP Board has added more new certificants in the past 10 years alone, from 58,000 to 83,000, than the FPA has in total membership, which still languishes under 24,000.
This raises the question of whether the FPA really needs TNCs at all, or if the problem is that national simply cannot figure out the right strategy to execute growth even as planning, CFP certificants and every other planning membership association grows around them.
8) Compounding the problems is the true elephant in the room. The same leadership has been charged with growth and leadership since the 1990s, and the FPA has failed to grow at all for any of that time. How many consecutive years must the FPA fail to grow before the national board in its fiduciary role acknowledges that just maybe the chapters aren’t to blame, but leadership is?
9) If national believes it can create better alignment and efficiencies with its new committee structures and investments into technology, then go ahead and make them without dissolving the chapters.
Neither the OneFPA Council, new committee structures or technology investments requires chapter dissolution to occur, after all. Prove that national can really execute superior systems, establish measurables and KPIs to demonstrate the strategy’s effectiveness, and incentivize chapters to dissolve down the road by actually showing improvement. This is a far more sound strategy than saying, “Trust us, give us all your money, we’ll figure out later how it will all work out.”
10) While the OneFPA Network proposal stipulates that chapters which fail to accede to the OneFPA Network by the end of 2019 will be dissolved and have their assets forfeited to national — per the existing chapter affiliation agreement — at least some chapters have a viable Plan B: to voluntarily donate their own excess reserves to a charitable entity, such as the Foundation for Financial Planning rather than forfeiting them to national.
They could even seed a new, alternative chapter association that can re-affiliate itself to NAPFA, IMCA/IWI or even the CFP Board. Alternatively, the largest Alliance Forum chapters in particular are big enough that their collective excess reserves could even seed an alternative national association to the FPA. This would be unfortunate, but may represent the final option of protest for chapters that don’t buy into national’s vision of the OneFPA Network.
11) National has stated that it is open to stakeholder feedback, but has not proactively courted it.
For instance, its so-called Listening Tour — which has only been available to be scheduled virtually and solely for chapter boards — has failed to announce any actual times, dates or locations. The OneFPA Network proposal itself was only mentioned once in a single email to members in the past month, with no further explanations, solicitations for feedback, webinars or the aforementioned Listening-Tour-that-isn’t.
The original proposal would have required all FPA volunteers to be champions of the new proposal — though that requirement was already eliminated due to volunteer objections — and national’s decision to shift the employment status of all chapter executives to be employees of national, where national conducts the performance reviews and makes hiring/firing decisions, creates substantial future job risk for chapter executives who may object.
12) Better alignment to eliminate the us vs. them dynamic between national and chapters was explicitly stated as a reason for creating the OneFPA Network, yet it’s difficult to see how the proposal does anything to improve the situation.
Known for his advocacy for planning at all income levels, Paré wants the FPA to expand its membership to 24,000 and beyond.January 5
Evelyn Zohlen wants to build on the association's initiatives — including helping next gen planners find career paths.October 2
National has effectively said, “We’re dissolving your chapter independence with a hard deadline that you cannot fight, and transferring all of your money to our bank account. We’ll appropriately route $4.5 million in advertising, sponsorship and events deficit in a way that you’re happy with. Oh, and this of course is subject to a participatory governance structure that you can be involved in, but in which we retain key control of all the financial decision-making committees.”
You don’t fix an us versus them problem by engineering an aggressive takeover. If you want chapters to acquiesce to your governance, try showing some execution that actually works first and then go about securing the necessary buy-in.
13) At this point, national needs to officially press pause on the OneFPA Network, and use the intervening time to start implementing some of the key initiatives anyway — which don’t actually require chapters to be dissolved and gives national a chance to prove itself. That way it can figure out, and then speak more candidly, about how the important details will really work, and to determine whether current leadership is really appropriate for carrying the organization forward.
One of the key tenets of is that in exchange for chapters being dissolved as independent entities that previously had their own decision-making authority — albeit subject to their affiliation agreement with FPA national — volunteer leaders of TNCs as reconstituted under national will instead have a participatory governance structure through the OneFPA Council.
Notably though, while the states that the participatory governance approach “is a core element of the short and long-term success of the OneFPA Network, as it creates a sense of greater ownership for all leaders and increases leadership engagement, resulting in a model leaders are more likely to accept,” the OneFPA Council does not have any actual governance authority whatsoever.
Instead, the OneFPA Network proposal explicitly frames the Council as a “strategic body that provides input,” while the FAQs section even more directly states that the purpose of the Council “is to act as a strategic sounding board and provide feedback at a high level,” i.e., not as a decision-making body. That authority remains with FPA HQ.
And while the OneFPA Council does populate the key committees and task forces of the OneFPA Network, and national leadership has repeatedly emphasized that representation on committees and task forces will be a 50/50 split of national board representation and OneFPA Council representation, the leadership of those committees — including in most cases any key tiebreaker vote in the event of a split decision between chapters and national — remains entirely under the purview of national.
Representation on the key committees may remain 50/50, but the chair of the OneFPA Strategic Partnership Committee, which determines how sponsor dollars will be split with chapters; the chair of the OneFPA Leadership Institute Committee, which sets the training agenda that all volunteers and leaders will be inculcated into; the chair of the OneFPA Technology Task Force, which selects and oversees all the technology that chapters will be required to implement; and the chair of the OneFPA Nominating Committee, which selects the proposed slate of new national board members, are all themselves national board members selected by the FPA President to lead those committees — and in the event of a split decision, cast the tie-breaking vote.
Similarly, the OneFPA Resource Coordination Committee — which determines whether chapters are implementing their budgets “in accordance with the strategic priorities set [solely] by national” — is also chaired by a tiebreaker individual selected by the president of the national board, as is the chair of the OneFPA Transition Task Force, which sets all the timing and implementation milestones and requirements for chapters to make the requisite changes.
Notably though, the OneFPA Education Committee, which is focused more on disseminating best practices out to chapters, and the OneFPA Finance Committee, which primarily provides financial reporting to the board and sets the investment policy of its reserves — but does not have direct authority over chapters — have non-tiebreaker chairs selected directly from the committee membership itself.
In other words, the OneFPA committees are explicitly designed in a manner that ensures every committee that actually has decision-making authority over national has a chair selected by national who can cast a tiebreaking vote in favor of national if there is ever a split between national and chapters.
Committees that don’t have such chapter oversight authority, and thus don’t matter as much for control purposes, have no such board-appointed tiebreaker chairs. Stated more directly, national specifically structures the governance of the OneFPA Network to retain control over just the exact committees and task forces that actually matter most.
Known for his advocacy for planning at all income levels, Paré wants the FPA to expand its membership to 24,000 and beyond.January 5
No one organization can do it on its own, FPA President Shannon Pike said.October 4
The planning association says it needs to undertake “transformational change,” but its latest proposal may just multiply its problems.January 28
Perhaps even more significantly, the guiding documents also explicitly state that FPA HQ has reserved the right for its board to “review annually which FPA HQ committees, councils, and task forces are required for the following year” (Section IV, Subsection C, paragraph 3 of the OneFPA Network proposal document).
This means the board also retains unfettered authority to simply disband, reconstitute or otherwise change the rules and selection process for any committees or task forces, or the entire OneFPA Council itself, without any approval from TNCs, the OneFPA Council or the general membership — at any time it wishes. This is roughly akin to saying that Congress must ratify the actions of the president, but the president is given the right to disband Congress at any time and then proceed without congressional approval in the future. In such a framework, what do you think would happen the next time Congress disagreed with the president on an important issue?
So while the stated purpose of the OneFPA Council’s participatory governance structure is to “create a sense of greater ownership for all leaders and increase leadership engagement, resulting in a model leaders are more likely to accept,” the governance structure ensures ownership in name only.
And ironically, while national insists that the OneFPA Network is still focused on supporting its chapters first and foremost, the entire 27-page proposal explains in depth how every council, committee and task force will be composed, but fails to explain how the 86 volunteer chapter leaders themselves will be selected in the future, post-dissolution.
CONTROL OF FINANCES
Along with participatory governance, another key tenet that national has put forward is that chapters “will retain control of their finances.” In effect, local leaders would still decide how to use their dollars to run their local events.
Thus, while technically and legally the dissolution of chapters into a single national organization must result in all assets being consolidated into a single national account, the OneFPA Network proposal explicitly states that chapter reserves will be placed into segregated program accounts for the TNCs; the OneFPA Resource Coordination Committee will be responsible for providing monthly accounting of separate income and expenses for each TNC; and TNCs will have “final determination and control over their budgets and their existing reserves.”
Yet in reality, TNCs will have far less control over their finances than the proposal suggests. TNCs would retain authority over their segregated accounts, but that authority is only granted “through coordination with the OneFPA Resource Coordination Committee.” TNCs will retain control of their own budgets only after being “reviewed by the OneFPA Resource Coordination Committee,” and the new Financial System Protocols explicitly state that TNCs “have final determination and control over their budget and their existing reserves … based on guidelines established by the OneFPA Resource Coordination Committee.”
In other words, chapters have complete control over their finances — as long as they’re spending in a manner consistent with the articulated policies established by the OneFPA Resource Coordination Committee. Consequently, if the committee sets guidelines that two-day conferences are not deemed the best use of resources because they conflict with National’s own lucrative conference events, FPA Minnesota and FPA NorCal must disband their existing two-day events.
And if the committee determines that chapter meetings should only be held in a particular hotel chain or venue with which national has negotiated a certain deal, chapters must move their current meetings. And if the committee determines that chapters should be required to run all their events with a 20% cost allocation for the overhead costs of the support services that national provides the chapters — i.e., a national administrative fee — then chapters must cut their local expenses and shift more of their chapter resources to support more national infrastructure.
In fact, the latter in particular is a notable concern given national’s track record. After NexGen was folded into FPA after being founded as a separate entity, sponsorship dollars for NexGen events weren’t made fully available to NexGen, and instead were allocated against national overhead expenses, i.e., cost accounting allocation of national staff salaries to NexGen support. This resulted in national retaining the use of the bulk of NexGen’s sponsorship dollars for its own staffing needs.
Furthermore, it’s not even clear how sponsorship dollars will actually flow to chapters, as the proposal explicitly states that “policies with respect to the relationships and contracts with corporate partners [i.e., sponsors]” will lie with the national committee, and that TNCs will have a “key role” with respect to local sponsorships but only “while coordinating more nationally based relationships.”
This effectively means that national is aiming to structure more sponsorships nationally rather than at the local level. National will then determine how all sponsorship dollars are split between national and the chapters — as explicitly stated in the FAQs: “The OneFPA Strategic Partnerships Committee will assess and recommend the most effective approach to the strategic partnerships and how the monies get distributed.”
Of course, it’s entirely possible that the bulk of the sponsorship dollars will still be allocated to the chapters, but the fact that it’s even a question — when today, 100% of a chapter’s sponsorship dollars belong to the chapter itself — highlights that chapters will likely receive less than 100% of their sponsorship revenue in the future.
Similarly, the elimination of discrete chapters as independent entities and consolidation into a single national entity also threatens the existing allocation of chapter assessments, i.e., the additional local membership fee that chapters can assess to FPA members in their local region to fund local operations. That’s because it’s not clear whether or how chapter assessments will be collected, as the OneFPA Network initiative explicitly states that “relevant OneFPA committees and the board of directors will explore and answer what to do about dues and local assessments, including … if assessments are [still] allowed and, if so, for what, and what portion of dues is allocated to TNCs.”
The consolidation of staffing of chapter executives and other local chapter support staff into a single national entity means that chapters will no longer even have control over their own local administrators. While the FPA maintains that “compensation of TNC executives is handled by each TNC” and “TNC leaders will have the primary role in the performance evaluation and hiring processes,” ultimately the chapter’s ability to hire and set compensation for their own staff is still subject to review by the OneFPA Resource Coordination Committee.
And in what appears to be anticipation of potential disputes between National and TNCs, the FAQs explicitly state that “TNCs will have significant input in evaluating staff” — i.e., not control, but merely input — and in the proposed Governance Manual, under “TNC Obligations,” it is similarly stated that TNCs “will be involved in the hiring and performance review processes of TNC staff,” which again means they don’t ultimately control the hiring/firing processes.
So while national has insisted that “chapters maintain control of their finances,” here’s what that looks like in practice:
- Budgets and operating plans are set for review by the OneFPA Resource Coordination Committee, over which National specifically retains control through its appointed-chair structure.
- National has the ability to set its own guidelines and best practices policies that TNCs must comply with through the OneFPA Resource Coordination Committee, which gives National override power on any chapter event or policy that it deems unaligned with its strategic goals.
- National can set policies for cost allocations of national staff overhead against chapter finances, effectively compelling chapters to shift local revenue to fund national operations.
- National will control the allocation sponsorship dollars — the lifeblood of most chapters — with a stated intent of creating even more National sponsorships in lieu of chapter-level sponsorships, further shifting dollars to National. HQ also retains the ability determine whether or how much of any sponsorship dollars will eventually come back to TNCs.
- National will set and determine whether or how much chapters receive in assessments and dues-sharing from the national organization.
- National will retain control of chapter administrator employment status; approval of chapter administrator compensation through the budget approval process; and the determination of whether a chapter can even have a local administrator or not.
So of the three key sources of chapter revenue — event income, sponsorships and dues assessments — National has not only taken direct control of two out of three without even articulating the policies for whether or how much money chapters will receive, but it also has retained control of the bulk of key cost components for chapters as well. Ultimately, the only thing over which chapters largely retain control is their local events — albeit still subject to the OneFPA Education Committee’s oversight to avoid competition with National, as TNCs essentially just become local educational program delivery groups.
And perhaps even more concerning is the fact that if chapters still manage to run profitable local events without as much support from their sponsorships and dues assessments, those event profits — termed “reserves that accrued after financial integration is achieved” — were under the original OneFPA Network proposal not subject to the control of the TNC at all, and instead would have been allocated according to a recommendation to be created by the OneFPA Finance Committee, OneFPA Resource Coordination Committee and OneFPA Transition Task Force.
This would effectively end the practice of many successful chapters’ donating their excess reserves to organizations like the Foundation for Financial Planning and its pro bono planning services, and compelling them instead to reallocate their profits back to FPA HQ — or to whatever cause the FPA HQ Committees determine appropriate.
Granted, in a subsequent revision of the proposal, National eliminated this provision. But it did so by saying both future and existing reserves would be subject to review and policies set by the OneFPA Resource Coordination Committee, making the change a distinction without a difference.
The implication here is that not only do chapters lose control over their sponsorships and chapter assessment dues, but National may handle future positive cash flows differently as well. This may leave chapters with just enough money to run local programs or any other initiative that OneFPA Resource Coordination Committee blesses, while ceding the remainder of their finances — and control thereof — to the strategic, top-down goals of National.
WHY ‘TRANSFORMATIONAL CHANGE?’
As soon as the OneFPA Network initiative was proposed, some at least questioned why so many changes were needed, and why they were so drastic — i.e., calling for the dissolution of a chapter system that had been in place for nearly 50 years.
As the FPA itself puts it, “without a transformational change in the fundamental structure of FPA, we will not be able to withstand the landscape of challenges that are intensifying at a rapid pace,” and that the FPA “doesn’t have the resources in the financial planning landscape to survive and thrive given the current level of internal organizational separation.”
In other words, the FPA itself is suggesting that the need for change is about more than just a matter of volunteer alignment, but the resources and survival of the organization itself — a concern about the long-term financial health of the FPA that I have previously raised.
The good news — yes, there is some — is that the FPA’s recent membership challenges have largely stabilized, and after declining from over 28,000 members before the financial crisis to under 24,000 afterward, the organization has maintained itself in a channel between 22,000 and 24,000 members for the past 10 years.
Yet when the FPA was first formed over 18 years ago in its merger of the IAFP and the ICFP, it was a combined organization of 30,000. So despite the ongoing growth of CFP certificants —per its own bylaws the stated focus of the FPA is to “proactively advocate the legislative, regulatory, and other interests of financial planning and of CFP licensees” — the FPA has utterly failed to participate in any of the growth in CFP certificants since the IAFP/ICFP merger in 2000.
Since that time, CFP certificants have increased their ranks from approximately 36,000 to 82,000, even as FPA membership has declined from 30,000 to under 24,000. This in turn has caused an even more dramatic crash in the FPA’s actual representation of CFP certificants themselves, falling from more than 50% at the time of the merger to barely more than 20% today.
And unfortunately, just looking at membership woes for the FPA may understate the organization’s challenges, as the ongoing shift of planning away from products and their commissions to getting paid for advice is adversely impacting the FPA’s finances even more than its membership — and membership dues — challenges.
As the chart below shows, the FPA’s overall revenue as an organization has declined nearly 40% from its high leading up to the crisis, dropping from a peak of more than $16 million per year to barely over $10 million per year. And the decline is not solely or even primarily driven by a revenue decrease in dues — which ticked up over in the past two years, owing to the recent National dues increase — but instead by the FPA’s other business lines. Indeed, its various webinar and other product sales also contributed to the decrease, though the primary decline driver was its sponsorship-driven conference model and advertising-driven publication model, i.e., The Journal of Financial Planning.
As a result, while revenue from membership dues is down nearly $2 million from the peak, conference and sponsorship revenue is down another $2.6 million, and publication/advertising revenue is down an additional $1.8 million.
In this context, it’s suddenly easier to see why a centerpiece of the new OneFPA Network initiative is a strategic partnerships/sponsorship committee — controlled of course by National — alongside a OneFPA Education Committee whose stated purpose includes “reducing competition between National and chapter events.” Because while leading local chapter events like FPA NorCal and FPA Minnesota have sold-out exhibit halls and record attendance levels, the FPA’s sponsorship and advertising revenue is down nearly $4.5 million in under a decade.
This doesn’t bode well for how dollars will actually be allocated between chapters and National. As while National has struggled with its advertisers, sponsors and events, local successes at the chapter level have driven as much as $4 million of growth, according to what was reportedly announced at the recent FPA Chapter Leaders Conference.
That FPA National has been unable to figure out how to grow, let alone prevent a 15% decline in its membership for nearly 18 years — despite being focused on a base of CFP certificants that has more than doubled over that time period — ultimately raises the question of whether the problem lies with chapters not being sufficiently aligned and integrated, or whether it lies with National itself.
This is an especially pressing question given chapters have on average continued to grow their reserves to the tune of millions of dollars (albeit with some chapters far more successful than others), even as national has watched its combined advertising, sponsorship and event revenue fall by $4.5 million per year over the same time period.
The FPA’s current executive director and CEO, Lauren Schadle, joined the ICFP as its director of membership and marketing back in the ‘90s, then became its associate executive director and COO when the FPA merger occurred in 2000. She acceded to become CEO in 2012 after then-CEO Marv Tuttle — who himself was previously associate executive director of the ICFP in the ‘90s — retired.
Notably, Schadle’s leadership is supported by David Brand, who joined the FPA in the fall of 2013 as its strategic director — perhaps not coincidentally, just months before the FPA began laying the strategic groundwork for its OneFPA Network initiative — and was more recently cited as the FPA’s COO earlier this year in the midst of his public comments about dissolving the FPA New York chapter in what was clearly in retrospect a beta test execution of the chapter dissolution process. But in addition to his more recent role with the FPA over the past five years, Brand is also the former executive director of the ICFP from back in the ‘90s, when Schadle was first hired.
That means the FPA has been largely driven by the same ex-ICFP leadership for more than 20 years, through a time when the organization’s membership has remained stagnant and declining and its business model has been slowly and steadily eroding. That’s not to mention that one of the drivers of the merger of the ICFP into the IAFP in the first place was the reported financial woes of the ICFP, even in the ‘90s, as the organization struggled to figure out how to effectively sustain itself in the face of advertising and sponsorship revenue challenges — a problem that is now repeating itself again, under much of the same leadership.
In this context, it’s notable that while the FPA and former ICFP leadership of Schadle and Brand have developed a OneFPA Network initiative that suggests ultimately FPA’s struggles of waning membership and declining advertising and sponsorship revenues are implicitly the chapters’ faults, it’s telling that National — and not the chapters — is facing a decline remarkably similar to the one that eventually toppled the ICFP nearly 20 years ago.
And while National leadership insists that it faces daunting landscape challenges as an association — a phrase repeated often in the proposal — as well as increasing competition, every other major association and organization serving planners was able to grow throughout the ‘00s, and membership in the AICPA’s PFP section, IWI and NAPFA are all up more than 50% since the crisis. That’s saying nothing of the CFP Board’s increasing the number of certificants by over 40%.
Having worked alongside them on various FPA committees and task forces for nearly 15 years as an FPA volunteer, I can confirm that Schadle and Brand are certainly nice, pleasant people. But niceness doesn’t solve the problems facing the national board.
TRANSITION VS. DISSOLUTION
Notwithstanding all these concerns, having a series of 86 independent chapter entities isn’t necessarily the most efficient way to grow and execute a membership association. As while it may have been necessary 30-plus years ago for a startup association that didn’t have many national resources at its founding, and in an era where communication and collaboration tools were more limited, arguably there’s little functional reason to have each chapter reinventing the wheel independently every year.
In fact, for all 15 years I’ve been involved in the organization — both as a chapter volunteer and a president — a common wish and complaint has been to have more/better centralized resources. Everything from a standardized Chart of Accounts to facilitate chapter bookkeeping — and to enable nationwide chapter benchmarking studies — to templates for how to run a local chapter event or structure local sponsorships were desired. A shared database of potential speakers and a more effective centralized database for membership also were lacking. These deficiencies have been noted by FPA chapter leadership long before the OneFPA Network initiative was proposed.
Which raises the question: If National is so confident it can create all of this centralized functionality for its chapters under the OneFPA Network, why hasn’t it already created these resources?
As while chapters are technically independent entities, they are driven by usually time-strapped volunteers who would happily adopt easier/superior systems handed to them from National. In fact, that’s literally what the chapter leaders have been asking for, and why National states it is proposing the OneFPA Network in the first place.
So if FPA National is so capable of executing high-quality centralized resources — again, why haven’t they been created already?
In a word: execution. From building a centralized speaker database that proved so cumbersome for chapters that they just implemented their own shared Google Sheet instead, to the failure of National to provide a standardized Chart of Accounts; a series of National-facilitated website providers for chapters that have repeatedly created websites of lower quality and at higher cost than what many chapters already built themselves; to continuous requests from chapter leaders for National to upgrade its existing membership database that they already want to plug into and use more, the FPA National organization just hasn’t managed to deliver.
And while national cannot necessarily compel chapters to use centralized systems it makes under the current independent chapter system, it can certainly create the systems and make them so useful that chapters would want to use them anyway, especially since chapters are already asking for them in the first place.
After all, it would be different if National already had fantastic centralized functionality systems, but couldn’t get its chapters to implement them. In truth it could, as all chapters are bound by the FPA Affiliation Agreement, in which the FPA reserves the right to require chapters to follow policies and procedures established by National and procedures.
That only makes it all the more confusing as to why National feels the need to dissolve its chapters, consolidate their assets, take oversight of their budgets, finances, sponsorships and excess reserves, just to implement centralized technology that it could implement already under the current system, and has already failed to do effectively enough to gain chapter adoption for more than a decade.
A PLAN B?
So what can FPA members, chapters and their leadership do if they’re unhappy with the OneFPA Network as it stands?
The starting point is to share your feedback. National is accepting comments directly at OneFPANetwork@OneFPA.org, though notably those comments will not necessarily even be made public — which makes it difficult for National leadership to be held accountable for considering them.
Second is to get involved in FPA leadership’s Listening Tour. As noted earlier though, unlike the CFP Board, which publicly posts available locations to meet the leadership, the FPA has not made any information publicly available beyond a webinar link for chapter boards.
More broadly though, as long as local chapters remain independent entities, they are in control of their own organizations, their own finances and their own reserves. And while the FPA has made it clear that the current chapters will be dissolved at the end of 2019 — and that under the chapter affiliation agreement all remaining reserves must be distributed to National — it’s up to the chapters to decide how much in reserves remain on their books by the end of 2019.
This means that chapters who “conscientiously object” to consolidation of the chapter and its accumulated assets to National at least have an option. As a 501(c)(6) non-profit entity, they can potentially donate their excess reserves to some other charity instead, like the FPA chapter–supported Foundation for Financial Planning and its pro bono planning services.
Notably, chapters should still maintain sufficient operating reserves to execute the organization itself, lest board members risk breaching their fiduciary duty to maintain the integrity of the organization. But for chapters that have accumulated substantial excess reserves, they do technically have a choice as to whether to allow those assets to be escheated to National at the end of 2019. (Though state laws vary, so consult your local attorney before assuming as much.)
There also may even be an opportunity for chapters to remain independent entities and choose to re-affiliate themselves to another national organization aside from the FPA. For instance, would NAPFA, the Investments & Wealth Institute or even the CFP Board be willing to create its own form of a chapter affiliation agreement for the local entity and leadership to continue as overseers of an alternative membership organization? Or even donate their excess reserves to a new local 501(c)(6) membership association to replace the current one, that in turn affiliates with another of the advisor membership associations or organizations?
In point of fact, the subset of Alliance Forum chapters may even have sufficient excess reserves to seed their own competing membership association to the FPA and re-affiliate themselves to a new organization instead — albeit while still reverting their operating reserves to National under the existing affiliation agreement.
This means that if National cannot get its chapters to truly buy into the OneFPA Network vision, it runs the risk of causing a schism that re-creates the very split that the ICFP and IAFP bridged 18 years ago.
It’s not clear how open the FPA will actually be to its members’ critiques. Aside from the poorly implemented Listening Tour, most FPA membership didn’t even learn about the OneFPA Network proposal from the FPA itself, which shared the initiative with just a small subset of its chapter leaders who attended its Chapter Leadership Conference in person on Nov. 3 last year, and who then failed to share the announcement with the rest of the membership for nearly two more weeks, leading most members to learn about the initiative through third-hand news coverage.
Additionally, there are other very concerning overtones in the OneFPA Network proposal itself that suggest the FPA may not be ready or willing to accept constructive criticism and disagreement. For instance, the original proposal included a requirement that in the future, “volunteers of all committees, councils, and task forces will be required to complete Leadership Institute and FPA Champion Program training,” where the “Champions” program requires the member to “motivate and inspire members and volunteer leaders towards the vision of the OneFPA Network” and “utilize Appreciative Inquiry best practices to help others see the big picture [and] understand the benefits.”
In other words, all volunteers would have had to go through toe-the-line training, and failure to do so could result in them being removed as volunteers. After an initial uproar, the Champions requirement was removed, though the updated version will still require all volunteers to complete FPA Leadership Institute training and an orientation process.
Similarly, the shift of chapter administrators and other local-chapter FPA staff to become employees of FPA HQ, for which National has explicitly retained the right to making firing decisions and conduct performance reviews — even if the administrator is solely in the service of a local chapter far from FPA HQ — means National has wide latitude to terminate any chapter executives who fail to get on board with the OneFPA Network initiative.
After all, it’s one thing for volunteers to raise concerns about the merger; it’s quite another to tell all chapter executives, “We’re open to a diversity of views, but bear in mind that in under 13 months, we’ll be terminating your employment with the chapter and we’ll be your employer instead.”
The concern is not just one of idle musing. When I once published an article on my blog criticizing the execution of the National leadership, the organization responded by changing its attendee policy for the FPA Chapter Leaders Conference to ban my future attendance — after my having been a participant for 10 years — and issued a public letter suggesting that I shouldn’t be so critical of the FPA given that it “has done so much to support [my] own career and business advancement,” thereby turning constructive criticism into a personal attack.
This, even as my criticism was widely supported by chapters because the concerns were accurate and reflective of the membership, and failing to recognize that I’m critical of the FPA precisely because I want to see the organization succeed.
In fact, in recent years the FPA implemented its own HDR (Honest, Direct, Respectful) initiative for internal communications in recognition of the fact that the organization has a troubled track record of accepting constructive criticism and dissenting feedback.
THE TRUST DEFICIT
Change is hard for any organization, and the uncertainty it creates can be unsettling. National itself has acknowledged as much in emphasizing that “leading an organization through a transformational change initiative requires both recognition and courage to sufficiently disrupt the status quo to move to a new reality.”
Yet when there’s already a trust deficit and a lack of alignment between national and its chapters, uncertainty and ambiguity are far more likely to emerge. It is somewhat surprising that, despite what the FPA itself explicitly acknowledges as an us vs. them problem between National and the chapters, it has issued a OneFPA Network proposal with a concrete 13-month deadline to dissolve its chapters, and remarkable ambiguity about how most of the important parts of the new initiative will actually work.
Thus, while the current plan calls for FPA chapters to be dissolved and their assets escheated to National by the end of 2019, National itself acknowledges that it may take up to two years to determine the following:
- How nationalized sponsorship revenue will be split after 2019.
- Whether or how chapter dues assessments will function after 2019.
- What happens to any/all profits that chapters generate after 2019 (which later policies may or may not redirect away from the currently successful chapters).
- How overhead costs of national will or won’t be applied against chapter budgets.
- The policies and mechanisms by which the OneFPA Resource Coordination Committee will determine whether chapters are spending their resources consistent with National’s strategic framework.
- How local chapter leaders will even be elected — or selected, since they won’t be independent entities anymore — after the change occurs.
Simply put, if national want us to acquiesce to its governance, it should try showing us some execution that actually works before reinventing the wheel.
WHERE TO NOW?
There is no actual need to dissolve chapters to achieve the centralized functionality that the FPA suggests is necessary. The fact that 86 chapters file 86 separate Form 990s is somewhat absurd in practice, but it’s also a negligible cost for most chapters and the FPA as a whole. No chapter is standing up to say the organization is failing because of redundant entity administration costs.
The areas of real centralized need — from a standardized Chart of Accounts for easier chapter bookkeeping and improved chapter benchmarking, to a better membership database and technology resources for chapters to leverage — could be built now by national without consolidating the chapters.
The only difference between doing so as independent chapters and a single nationalized system is that in the latter, national can force the chapters to adopt the solution, while in the current system national has to actually execute a good system and convince the chapters to use it. Given national’s problematic history with execution, that is arguably a healthy level of checks and balances.
It’s also time to cut the consultant-speak and high-minded euphemisms, and speak candidly. To that end:
- Don’t deny that chapters are being dissolved when it will happen in 13 months if the current plan is executed.
- Don’t deny that there’s a massive shift in power and control to national with the new OneFPA Council and committee structure. Show us why we should trust it.
- Don’t call this an opportunity for transformational change and then claim that nothing will change for the chapters. It makes no sense to say you’ll accomplish transformational change without changing anything, and just breeds even more distrust.
- Don’t deny that this isn’t about taking control of the money and revenues so that sponsorships and chapter dues can be re-allocated toward National and away from the chapters. Show us exactly what you will do with the money that can lead us to better outcomes.
- Don’t say that the purpose of this change is to create better alignment and then deny that a part of this will involve eliminating the naysayers who aren’t aligned to the new vision. Instead, paint a better picture of the vision that really gets us all on board.
- Don’t say that this has been communicated as part of the OneFPA initiative all along, when over the past two years the leadership has flatly denied that the move to state councils with centralized FPA HQ staff and the dissolution of the New York chapter were laying the groundwork for eliminating chapters.
- Don’t claim that the OneFPA Network was just a recent initiative decided at the June 2018 board meeting when the proposal already acknowledges “beta tests” going back for several years. Instead, be honest about what’s actually been done, and what the plans really were and when, because it’s the only way we’ll ever trust your forward-facing statements from here on out.
If national really wants to get all its chapters and members on board, then put a hold on the entire proposal and take time to dig into the details. If the organization believes it can execute the entire transition in less than 13 months, it should be easy to flesh out a detailed proposal for how all this will work in even less time.
This means it’s time to get rid of placeholder labels and committees, as well as “TBD” committee agendas. Let’s talk about how the money will really flow, under what policies and procedures, with what splits and revenue and cost allocations, and what the implementational plan will be to get from here to there. Let’s also hear how we intend to measure the initiative’s success, beyond just saying that “a set of robust measures” will be developed at some indeterminate point of the future — which is the very epitome of not creating accountability.
It’s simply not enough to say that the FPA is a “Learning Organization.” Take a track record of inconsistent execution, stagnant membership, declining revenues and say, “I know all your chapters and money will but gone, but trust us, this time it will be different.” It’s not even clear that local chapter board members could say yes to such a blind-leap proposal without more due diligence on the actual details, lest they breach their own fiduciary duty as board members of their local chapters.
But ultimately, the real question that needs to be considered by the FPA national board is not whether or how to better present the details of the OneFPA Network proposal, but to look at the root causes that have created its perceived need in the first place. If the problem has been a failure of good centralized technology that chapters might adopt, the solution isn’t to dissolve the chapters and force them to use what’s been created. Rather, it’s to address the execution problem that has made chapters not want to adopt it in the first place.
And if after 18 years of the merged organization 86 chapters are not well aligned, is that really the fault of the chapters or of national leadership for failing to figure out how to align them? Exactly how many years should membership be expected to wait in the face of stagnant membership, declining revenues and problematic execution before we decide that maybe we should cast our allegiances elsewhere?
And if the national board really believes that the OneFPA Network is the right vision for the future, should the current leadership be held accountable for its already painfully botched execution and communication of the rollout of such an organizationally critical initiative?
Perhaps it’s time for the national board to address the real elephant in the room, which is not whether the OneFPA Network is structured properly (it’s not) or whether the rollout should be delayed (it should), but whether it’s time to forego the new chapters — and instead create the new national.