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Financial planners on Finra oversight: Thanks, but no thanks

FPC backs SEC as appropriate regulator for the group; claims Finra's regulation has been 'uneven'

The Financial Planning Coalition has asked the Securities and Exchange Commission to retain regulatory authority over its 75,000 U.S. members, thus preventing Finra from expanding its oversight to include advisers.
In a letter to the Securities and Exchange Commission yesterday, the Financial Planning Coalition said the commission’s enhanced resources (thanks to the Dodd-Frank Act) will allow the regulator to boost its own inspections and oversight of advisers.
The coalition, which includes the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Advisors, said the Financial Industry Regulatory Authority Inc.’s regulation “has been uneven at times.” The letter then provides seven instances of trading and market problems dating back to the 1930s.
Creation of a new self-regulatory organization would take a “lengthy legislative process” that could take more than a year “in the current polarized political environment,” the coalition wrote.
“Limited resources are most efficiently put to use by dedicating them to an existing infrastructure, rather than investing a significant portion in building a new infrastructure,” the letter stated.
A spokesperson for Finra was not immediately available for comment about the FPC’s assertions.
The financial planner group joins the Investment Adviser Association, the Investment Company Institute and the Managed Funds Association — which represent advisers, mutual funds and the alternative investment industries — in opposing an SRO for advisers. All these groups support increased SEC sources for enhanced advisory examinations.
Finra wrote in a letter to the SEC last month that it was well-suited to serve as the SRO for financial advisers. The broker-dealer regulator said it would create a separate affiliate with its own board of governors to ensure it “establishes programs appropriate to the adviser industry,” Finra President Richard Ketchum wrote.
Dodd-Frank requires the SEC to report to Congress by next month the results of a study on enhancing adviser exams and whether an SRO for advisers is needed. The SEC has been taking comments on the provision.
Creation of an adviser SRO would require legislation from Congress.