FPA hopes to leverage court ruling

NEW YORK — The Financial Planning Association is hoping that the U.S. Court of Appeals ruling overturning the broker-dealer exemption rule will jump-start the trade group’s initiative to reach out to large financial services firms.
“I think it will definitely spur interest,” said Marv Tuttle, the Denver-based FPA’s executive director.
“Clearly, our hope is that [the ruling] will help the initiative and be an incentive for large firms to get on board” said Nicholas A. Nicolette, FPA president and principal of Sparta, N.J.-based Sterling Financial Planning Inc.
To date, only one large firm — Philadelphia-based Lincoln Financial Advisors Corp. — has signed up with the association’s Alliance Program for major firms, which the FPA characterizes as those having 100 or more advisers as employees or affiliates.

But the FPA anticipates that the ruling — if it is not overturned — will stimulate client demand for financial planning at big companies, which in turn will make the companies more inclined join the organization.
Currently, four or five firms are “seriously considering” joining the Alliance Program, said Tim Welsh, president of Larkspur, Calif.-based Nexus Strategy LLC and chairman of the FPA’s major-firms task force.
One of those firms, he said, is Minneapolis-based Ameriprise Financial Inc., the new employer of former FPA president James Barnash, who previously worked at Lincoln Financial.
Views on the impact
Firm executives are of differing opinions on the impact of the ruling. Some, such as Nancy Johnson Jones, Denver-based chief compliance officer for BKD Wealth Advisors LLC of Springfield, Mo., think that the ruling will aid the FPA initiative.
“At least I hope so,” added Ms. Johnson Jones, who is also an FPA member and is on the association’s fiduciary task force.
But Sanford “Sandy” Axelroth, senior vice president of Lincoln Financial, said that the ruling “will probably not influence” firms to join the Alliance, although it will certainly “push more firms to become RIAs and ensure there are more investment adviser representatives within their ranks.”
Mr. Axelroth said: “This should lead to more planning, and individuals’ getting a certified financial planner designation. However, investment advice, even on a fee basis, is not necessarily the same as financial planning.”
Large companies may resist allying themselves with the FPA, which, after all, was the plaintiff in a lawsuit that most of them opposed, said Bill Moran, vice president of financial planning industry relations at Ameriprise.
Put more bluntly, “some firms are pissed off at the FPA,” said one insurance company executive, who asked not to be identified.
Also problematic, some industry observers say, are the requirements that firms must pledge to honor before joining.
Particularly problematic, say industry executives, is a condition that at least 90% of CFP certificants in a firm maintain membership in the FPA.
Mr. Moran calls it a “significant hurdle” for a large company such as his, which has about 3,000 planners, most of whom are independent contractors.
He said he has asked the FPA to consider “a different threshold” for the percentage of employees who must be FPA members.
The 90% figure was meeting resistance from big companies and may be “negotiable” in the future, said Sean Walters, managing director of knowledge and market development for the FPA, and point man for the major-firm initiative.
Additionally, skittish legal departments may find well-intentioned phrases such as using financial planning “for the ultimate benefit of the client” to be too broad, leaving companies vulnerable to potential lawsuits, according to Mr. Barnash, who is the national director of financial planning for Ameriprise.
Reaching the right executives
Industry executives also say that the FPA needs to promote its initiative and benefits more aggressively, and do a better job of reaching the right executives at large firms.
Promoting the major-firm initiative is “a big priority” for the FPA, said Mr. Tuttle, adding that the organization plans to dedicate more time, resources and manpower to the project over the next three to five years.
As an example, Mr. Walters pointed to the progress that the FPA has made at its Major Firms Symposium, held last fall in Nashville, Tenn., which brought together executives from large firms to network and discuss best practices at the association’s annual conference.
Nearly 50 firms participated, including such financial powerhouses as The Vanguard Group Inc. of Malvern, Pa., Citigroup Inc. of New York and The Charles Schwab Corp. of San Francisco — approximately double the number that attended the inaugural symposium in 2005.
This fall in Seattle, Mr. Walters said, the symposium will be expanded to last a day and a half, and conference calls for large firm participants are being held quarterly.
“Our goal is to make inroads into all different kinds of organizations to deliver financial planning,” he said. “This initiative is critical to our mission.”

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