It would be an understatement to simply call this revolution in financial management an accident.
One of the main initiators of the revolution, once a vacuum cleaner salesman, later became a marketing consultant and inspirational writer. Another promoter, who had pitched insurance, switched to selling teaching supplies and earned a master's degree in psychology. Both live in Colorado, far from Wall Street or any other financial center.
Originally envisioned, the first preparatory meeting for this new thing would be a historic summit, but only 13 people were invited to attend, and the meeting happened to hit one of the worst bear markets in U.S. history.
Most frustratingly, there is no clear course of action for this infant change, and there has been a severe shortage of funds in the early days of the change.
The question of funding is ironic — the change that began in December 1969 was designed to help ordinary Americans take control of their own financial destiny, but if the organization created for it is not inherently solvent, how can it achieve it?
Despite the many ups and downs, financial management is still the first nascent industry to emerge in the past four centuries. It has achieved great success in the United States and around the world beyond the fervent hopes of its founders.
Despite the failure of financial management at the first signs, after 40 years, the number of CFP licensees worldwide has exceeded 120,000, and dozens of related institutions have provided them with education and training.
ICFP Seminar, 1985 Image source: A History of Financial Management.
This is a thrilling success story, a story of the pioneers of this change, and a story about the spark of change that has spawned a deep, dynamic and growing body of knowledge step by step.
Globally, 1969 was a milestone year. Neil Armstrong became the first person to set foot on the moon in July of that year, and Western films like Midnight Cowboy, Butch Cassidy and the Sundance Kid and The Wild Bunch shook the world.
But in financial services, there is little sign of change. For decades, financial services were primarily synonymous with one thing: sales.
In 1924, the introduction of mutual funds broadened investment avenues for small property owners. Ten years later, in order to prevent investors from repeating the mistakes of the 1929 stock market crash, the Roosevelt administration promulgated the Securities Act of 1933, the Securities Exchange Act of 1934, which promoted the establishment of the SEC (Securities and Exchange Commission), and the Investment Adviser Act of 1940, which regulated information disclosure and investor education, and established guidelines for comprehensive regulation of the investment industry.
For the next 30 years, the financial services industry remained almost unchanged. Year after year, the dominant factor has been a handful of large securities firms whose main business is to market stocks to wealthy customers, from which salespeople receive commissions.
Banks also provide trust services only to the wealthy. For the average American, "investing" means buying life insurance — usually traditional whole life insurance with a defined death claim amount and cash value.
Insurance salespeople work to earn commissions; lawyers draft wills, set up trusts, and sometimes provide tax advisory services; and certified public accountants provide tax filing services.
At that time, the term "financial planner" was rarely used, and when it was mentioned, it referred to insurance clerks who provided both life insurance and estate planning and annuity insurance services.
At the same time, "financial planner" may also refer to a practitioner who has a dual license to practice insurance and mutual funds.
The financial management regulatory process as we know it today was not clearly defined at the time. Rich White, an early chronicler of the financial industry, once described the situation in the early years this way:
Until 1960, life insurance was still the core content of financial management... By definition, a financial planner is an insurance salesman who provides "death benefits" and other services to the public. Financial planners... Estate taxes are also estimated for wealthy clients and customers are marketed for insurance that can raise funds for these taxes. They set up studios to analyze their clients' financial goals and sell a combination of life, disability and annuities to them.
Despite the calm on the surface, the dark tide of innovation began to surge. Veterans returning from the battlefields of World War II and the Korean War created new markets for financial products, while the booming economy at the time meant people had cash available for investment.
The traditional American pension method based on corporate pensions and social security benefits was still mainstream at the time, but its position began to be challenged.
In 1962, the U.S. Congress passed the Self-Employed Retirement Act, which provides that partnerships and unincorporated businesses enjoy the same tax benefits as corporate businesses.
At the same time, innovators in academia, politics and business are beginning to re-examine traditional financial service models and seek new models.
The ideas advocated by these innovators, including their vision of providing financial services in new ways, will have a profound impact on the industry in the future.
Related Reading
"History of Financial Management" By E. Xiao Denby Brandon H. Oliver Welch Publisher: CITIC Publishing Group Price: $70.00
Author E. Jr. Denby Brandon, a CFP holder, has been a director of the CFP Standards Committee since 1985, chairman of the CFP Standards Committee from 1989 to 1990, first chairman of the International CFP Accreditation Organization – Member Associations Committee in 1992, co-founded brandon Research Inc. in 1952, and chairman of Brandon Financial Management Inc. in Memphis, Tennessee in 2009. In 2007, Brandon received the P. Kemp Finn Jr. Award, the highest honor of the year, from the Financial Management Association. Author H. Oliver Welch is Honorary Chairman of the CFP Standard Committee and PhD in management, economics, accounting and administration. He is also a lawyer and real estate agent, with professional titles such as urban planner, CPM (Registered Property Manager), PFS (Personal Finance Specialist), CFP (Certified Financial Planner), CPA (Certified Public Accountant), and has served as an executive in a number of listed companies in the securities, real estate, resort and aviation sectors.
This is a 40-year history of the budding and change, turbulence and unification, growth and expansion, change and innovation of the financial management industry. This book very beautifully intertwines the characters, institutions and events in the development of the financial management industry, depicts a colorful picture, accurately outlines how financial management was born from a seed concept, and then established a unified non-profit industry organization under the efforts of pioneers, improved education, ethics, examination standards, unified certification titles, etc., and finally developed into a truly global industry process. The 40 years from 1969 to 2009 are only part of the development process of the financial management industry, which is still in transformation and progress, so this book is a very valuable resource in guiding the financial management industry to cope with future challenges and opportunities. At the same time, this book has a strong enlightening significance for the birth and development of every industry!
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