Evidence-Based Financial Planning: To Learn . . . Like a CFP

Abstract

• The financial planning profession’s body of knowledge consists of a mix of consensus-based best practices and research-based findings founded upon formal standards of evidence. Even a cursory examination of that body of writing and codified practice, however, reveals the former to vastly dominate the latter.

• The scientific method provides a framework for validating the profession’s best practices, so that practitioners can have confidence that their “best” practices are based on the “best” evidence.

• If financial planning is to leave its adolescent stage of development and achieve its full potential as a learned profession, three requirements must be met:

- It will require a commitment by all practitioners to stay abreast of new research, without regard to whether or not it qualifies for CE credit.

- It will require practitioners to possess or acquire the ability to read and critically evaluate that research and a commitment by financial planning educational programs to impart those skills to students.

- It will require a commitment on the part of practitioners to partner with academics in identifying the profession’s most important questions and designing research initiatives to answer them.

Keywords: financial planning, learned profession, science, scientific method

JEL Classification: D10, D11, D12