Financial Planning Coalition wants oversight board for financial advisers

Going beyond their past call for a professional oversight board for financial planners, the Financial Planning Coalition today asked Congress to bring under one organizational umbrella all advisers who provide financial planning services. “The Financial Planning Coalition supports the creation of a professional oversight board for financial planners and advisers — much like the professional medical or legal boards — that would establish baseline competency standards for financial planners and require adherence to a stringent fiduciary standard of care,” Diahann Lassus, head of the National Association of Personal Financial Advisers, said in testimony prepared for a House Financial Services Committee hearing this morning. NAPFA of Arlington Heights, Ill., the Financial Planning Association of Denver, and the Certified Financial Planning Board of Standards Inc. of Washington constitute the Financial Planning Coalition. The lack of a professional oversight board for financial planners is “one of the most prominent gaps in the delivery of broad-based financial advice to the public,” Ms. Lassus said in her prepared testimony. The areas covered by financial planning are regulated under a diverse set of regulations, said Ms. Lassus, who is president of Lassus Wherley & Associates PC of New Providence, N.J., which manages $250 million. “As a result, no single law governs the delivery of financial planning advice to the public,” she said. “The byproduct of this is a patchwork regulatory scheme where financial planners currently maintain as many as three different licenses” for insurance, brokers and investment advice, each with different standards of care and accountability to consumers,” thus it is difficult for consumers to differentiate among the approximately 300,000 financial agents offering advice, Ms. Lassus said. “Our goal is to have all financial intermediaries who offer broad-based financial advice subjected to the high standards of a fiduciary,” she said. The professional oversight board, which would be authorized by the Securities and Exchange Commission, would be responsible for establishing competency standards for financial advisers, developing a code of professional conduct, requiring fiduciary standards, and investigating and conducting disciplinary hearings. The board would apply principles-based regulation to individuals providing financial planning, not to the firms that employ them, Ms. Lassus said in her testimony. The CFP Board would be a logical choice to perform the function, said Marilyn Mohrman-Gillis, managing director of public policy for the CFP Board. “The CFP Board has been setting competency and ethical standards for CFPs, it understands the profession and fully embraces the fiduciary standard of care,” she said. The Financial Planning Coalition has been talking about the proposal with policymakers on Capitol Hill, Ms. Mohrman-Gillis said. “People recognize the gap and the need to do something about it,” she said.