In the face of opposition from influential insurance and securities industry groups, the Financial Planning Coalition has moderated its ambition to get Congress to establish a broad regulatory scheme for financial planners.
In the face of opposition from influential insurance and securities industry groups, the Financial Planning Coalition has moderated its ambition to get Congress to establish a broad regulatory scheme for financial planners.
After lobbying for a House bill that would define financial planning as anything encompassing two or more financial services to individual clients and subjecting those planners to an industry oversight board, it is now asking Congress to authorize a baseline standard and asking practitioners to seek licensing voluntarily from a coalition-endorsed authority.
The FPC, comprising the Financial Planning Association, the Certified Financial Planner Board of Standards Inc. and the National Association for Personal Financial Advisors, has yet to find a champion even for its more moderate agenda in the Senate, though the group continues to employ a lobbyist, Richard Salmen, chairman of the FPA, said in an interview today.
“We want to establish a baseline standard in law that says, ‘This is what it means to enter the financial planning market' — something that would be below [the standards of qualifying] for the CFP mark,” Mr. Salmen said. “Our goal as a coalition is to be pragmatic, not just idealistic.”
The FPC has not publicly disclosed its current legislative proposal, but its revised ambitions are likely to please the large swath of insurance agents and brokers who sell commission-based proprietary products and feared that an FPC-adopted standard would require them to register, disclose compensation schemes and be regulated as planners.
"The bottom line is the financial planners just don't have the fire power," said Mercer Bullard, president and founder of Fund Democracy Inc., a consumer advocacy group that has been lobbying to obtain a universal fiduciary standard of care for any broker or planner giving financial advice. "Nothing was more painfully clear in the recent round of legislative wrestling than that they can't hold a candle to the fireworks that the insurance lobbyists are able to put on."
Even with its lower ambitions, the coalition admits that regulation of financial planners ranks far down on the priority list of politicians working on financial regulatory reform. To that end, the group has proposed that Congress authorize a study of the financial planning industry that would have to be delivered within six months of passing financial reform legislation. The House of Representatives reform bill passed in December contains the study provision. The Senate has not yet passed its version of regulatory reform.
See the Feb. 1 issue of InvestmentNews for an in-depth story on the FPC's plans.
