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Mark Schoeff Jr. looks at what's really happening on Capitol Hill - and the upshot for advisers.

CFP Board turns to CFPB to promote its credential

New agency offers route to 'recognition, regulation' when Congress resists

Jan 15, 2013 @ 2:53 pm

By Mark Schoeff Jr.

One of the most controversial creations of the Dodd-Frank financial reform law – the Consumer Financial Protection Bureau – is not supposed to creep into investment-adviser regulation, which is under the aegis of the Securities and Exchange Commission.

The CFPB will focus on areas such as credit cards, payday loans and mortgages. For instance, it proposed last week a qualified mortgage rule that would prohibit lenders from providing home loans unless they take reasonable steps to ensure the recipient can repay them.

So far, the CFPB is best known as a lightning rod for Republican criticisms of the Dodd-Frank law. The Senate resisted confirming a CFPB head, so the current director, Richard Cordray, is operating under a temporary recess appointment.

Although the CFPB doesn't directly touch the investment advice space and is best known for being a political punching bag, advisers should keep an eye on the agency. The Certified Financial Planner Board of Standards Inc. certainly is.

The CFP Board, whose leaders refer to the CFPB as “the bureau” to reduce confusion, may have found an ally to help promote the CFP credential.

Over the summer, the CFP Board filed a comment letter urging the CFPB to establish a ratings system for financial certification and designations in order to protect seniors from financial abuse. This spring, the CFPB is expected to submit recommendations to Congress and the SEC on ways to prevent financial exploitation of the elderly.

Turning to the CFPB is a savvy political move by the CFP Board to achieve one of its primary goals for 2013 – increasing the recognition of and regulation surrounding financial planning. Although born in the midst of a political fight, the CFPB is now upright and walking – running, in fact – on its own. In some ways, it is a better venue for the CFP Board's efforts than Capitol Hill.

“We don't see any great appetite for regulation in 2013,” CFP Board chief executive Kevin Keller said in an interview last week with InvestmentNews. “We do think there are a number of things we can do to enhance the recognition of financial planners and financial planning.”

That's where the CFPB's initiative to target senior financial abuse comes in. The CFP Board is trying to convince Congress that financial planning should be regulated separately from other investment advice, a move that would help establish it as a distinct profession.

That argument was set back by a 2011 Government Accountability Office report, mandated by the Dodd-Frank law, that said that separate regulation could not be justified without further information.

While the CFP Board tries to fill in the information gaps GAO cited, it is encouraging the CFPB to implement the ratings system for financial credentials, presumably so that the CFP mark stands out among the 150 or so designations.

“That's well short of regulation, but it increases the recognition of financial planning,” Mr. Keller said.

Look for the CFP Board's relationship to the CFPB to deepen.

“Its name alone – consumer financial protection – speaks very closely to the CFP Board's mission,” said Nancy Kistner, CFP Board chairman and a managing director at U.S. Trust Bank of America Private Wealth Management.

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