FPA splits with CFP Board over state regulation of financial planners

FPA seeks policy influence at state, federal levels; CFP Board thinks states should not get involved, and NAPFA agrees

Sep 28, 2018 @ 2:17 pm

By Mark Schoeff Jr.

A trade group representing thousands of financial planners has split with the organization that grants the financial planning credential over whether the profession should be regulated at the state level.

Earlier this week, the Certified Financial Planner Board of Standards Inc. announced it opposes state oversight of the planning process, asserting it would potentially create regulations that vary from state to state and increase compliance costs for planners.

The Financial Planning Association is resisting that stance.

Just as a column by CFP Board chairman Richard Salmen appeared in the print edition of InvestmentNews on Monday explaining the board's decision, Lauren Schadle, FPA executive director and chief executive, sent a message to FPA chapter leaders saying the CFP Board is misguided in supporting only federal regulation.

"Locking FPA into a strategy in a volatile landscape does not adequately support our members or the profession now or in the future, since the professional landscape is always shifting and will continue to do so in the future," Ms. Schadle wrote. Although the letter isn't explicit, it indicates FPA is keeping an open mind about potential state regulation of financial planners as a profession.

In an interview, Ms. Schadle said it's important to keep lobbying avenues open at the state level in order to gain maximum leverage for FPA's approximately 23,000 members — about 70% of whom hold the CFP designation.

"What we disagree with is the approach to dismiss state advocacy outreach outright," she said. "We're here for our members. We want to give them an opportunity to share their opinions and their voice to shape an advocacy agenda whether it is at the state or federal level, because this is their profession."

The FPA, CFP Board and the National Association of Personal Financial Advisors comprise the Financial Planning Coalition. Under that umbrella, they try to influence regulations and legislation affecting advisers. For instance, the FPC filed a comment letter on the Securities and Exchange Commission's investment advice reform proposal.

NAPFA backs the CFP Board's position on state regulation.

"On the whole, NAPFA members believe that an effort to regulate financial planners at the state level would result in a patchwork of inconsistent state regulations that would be operationally cumbersome and potentially leave confusion in its wake," NAPFA chairman Steve Craffen and chief executive Geoffrey Brown wrote in a letter to NAPFA members this week.

CFP Board chief executive Kevin Keller denied there is a family feud within the coalition.

"What we agree on is that we need to elevate the profession of financial planning," Mr. Keller said. "We might have different views on how to get there. But the coalition is intact. We're working together and moving forward."

The overarching goal of the coalition, promoting the "recognition of financial planning as an established profession," remains the same, Mr. Keller said.

Ms. Schadle also downplayed the disagreement within the FPC.

"There are times when we don't agree on every issue," she said. "We have different constituents that we serve, and for FPA, we believe this is the best course of action."

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