The financial services reform bill that the Senate Banking Committee approved yesterday calls for a study of the regulatory regime for financial planners. But the legislation does not call for the creation of an oversight board — something the Financial Planning Coalition had hoped for.
The coalition, which is trying to upgrade the planning industry by creating standards for anyone hanging out a shingle as a planner, had hoped that the bill shepherded through the committee by Chairman Christopher Dodd, D-Conn., would include a registration requirement for planners that would be monitored through a new oversight board.
The proposal in the Restoring American Financial Stability Act of 2010, which will now be considered by the full Senate, is a diluted version of the regulatory scheme that the coalition's champion on the committee, Sen. Herbert Kohl, D-Wis., had hoped to squeeze into the bill.
The legislation reported out of the Senate committee by a vote of 13 to 10 merely adopts Mr. Kohl's call for the Government Accountability Office to examine current oversight of the
financial planning industry at the state and federal level.
As part of such a study, the GAO, the investigative arm of Congress, would study the similarities and differences in
financial planning services provided by insurance agents and investment advisers, the degree to which consumers are aware of such differences and the professional standards that currently govern planners and advisers.
The initial language that Sen. Kohl proposed would have required anyone hanging out a planning shingle or offering two or more planning services to be licensed by an oversight board sanctioned by the Securities and Exchange Commission. The board would have had the ability to impose fines against planners who failed to meet certain standards and moved licensing and registration powers. The board also would take over licensing, registration and qualification standards currently administered by some states.
The Financial Planning Coalition — comprising the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Advisors — has been vigorously lobbying for higher standards. Its efforts have been opposed by insurance agent groups, broker-dealers, as well as some investment advisers who say they are already adequately regulated by the SEC.
“I would like to thank Sen. Dodd for including a GAO study investigating regulation and oversight of the
financial planning industry,” Mr. Kohl, who is chairman of the Senate Special Committee on Aging, said in a prepared statement. He went on to state that the study would not only help expose any gaps in state and federal regulations, but also look at the use of other designations that are being used to take advantage of consumers
In a statement issued by the the Coalition, CFP Board chairman Robert Glovsky said that the committee’s inclusion of a financial planner study in the Dodd bill "represents the first step toward filling a regulatory gap and strengthening consumer financial protections.”
