15 transformational advisers: Daniel Moisand

As head of the FPA, Moisand sued the SEC over the 'Merrill Lynch rule' — a move that has left an indelible mark on the brokerage industry

Jun 13, 2013 @ 8:45 am

By Bruce Kelly

Daniel Moisand is an outspoken and intense advocate for the advisory industry's need to treat investors as fairly as possible. In fact, one of his chief professional accomplishments hangs on that very issue.

Mr. Moisand was president of the Financial Planning Association in 2005 when it sued the Securities and Exchange Commission over the so-called Merrill Lynch rule, which exempted fee-based brokerage accounts from falling under the Investment Advisers Act of 1940. A federal appeals court in 2007 threw out the Merrill Lynch rule, but, to the displeasure of planners such as Mr. Moisand, a temporary rule for broker-dealers with such accounts has been in place ever since.

“It was patently absurd, in our mind, that you could call an organization an adviser and invest, and then claim the investment advice was incidental,” Mr. Moisand said. “If you were holding yourself out as an adviser, you should be regulated as one.”

PHOTO GALLERY 15 transformational advisers

The FPA's fight against the SEC over the Merrill Lynch exemption was a seminal moment for the financial advice industry, said Diahann Lassus, co-founder of Lassus Wherley and Associates LC and past chairwoman of the National Association of Personal Financial Advisors.

“It was one of the times when a group of people stood up to the powerhouses on Wall Street and said, 'This isn't right,'” Ms. Lassus said.

The FPA and Mr. Moisand fought the good fight against long odds, she said.

“It has changed the landscape in terms of the brokerage business and long-term financial planning,” Ms. Lassus said. “Before [the suit], the brokerage industry's leadership pretty much ruled the world. They didn't see planners and advisers as direct competition to what they were doing, and that changed.”

The crux of the problem for Mr. Moisand and financial planners who think as he does that brokers sell securities under a suitability standard, while planners and investment advisers work under the more rigorous fiduciary standard.

The Dodd-Frank Act authorized the SEC to reconcile those differences, but so far, the agency has come up empty on any form of implementation. “It's still a regulatory mess,” said Mr. Moisand, 46, principal of Moisand Fitzgerald Tamayo LLC. “The whole idea of harmonization is a crock.”

Indeed, he believes the SEC and the rest of the financial services industry need look no further than the Advisers Act to find the framework for a unified fiduciary standard for all advisers, brokers and agents who give investment advice.

“The problem is [our regulatory system] is still primarily run by Wall Street,” Mr. Moisand said. “The Securities and Exchange Commission has the mechanism to require people who hold out as advisers to be held to a fiduciary standard, but they haven't done it.”

Mr. Moisand wasn't always a financial planning firebrand. He says he didn't even know that financial planning existed as a profession when he graduated in 1989 from Florida State University with a bachelor of science in finance. He wasn't blind, however, to consumers' need for personal financial advice.

“When I got a bachelor's in finance, much of the coursework was corporate-finance based,” he said. “Most of the people I knew didn't know anything or care anything about that. The question people cared about wasn't, should we issue convertible bonds? Most of my friends were just trying to make sense of a 401(k) plan.”

Like many financial planners, Mr. Moisand got his start selling life insurance, and ditched that after a year or so. He spent almost a decade affiliated with large independent broker-dealers before eventually becoming a fee-only financial planner in 2000.

Despite his battles, Mr. Moisand said he still maintains some hope that the investment advice industry will “change in the way it needs to change” in his lifetime.

Unfortunately, the stock market crash of 2008 wasn't enough to cause lawmakers and regulators to act effectively, he said. “Some senator's mom is going to get screwed over somehow and then it will be personal. It's discouraging that something like the financial crisis wasn't a catalyst to change the business.”

But the regulatory quagmire he sees doesn't cloud his vision of the future of the investment advice industry.

“I think the future for the profession is very bright,” Mr. Moisand said. “The forces that keep demand high for advisers' services, such as increasing complexity of investors' finances, I don't see that lightening up anytime soon. The demand for service and good advisers who deliver those services ethically will continue to explode.”


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