The leadership of the CFP Board of Standards expressed serious concern Friday about proposals under consideration on Capitol Hill to regulate financial advisors via an entirely new regulatory body or FINRA. The role should properly stay with a better-funded and newly empowered SEC, according to the leaders of the CFP Board, speaking at a private media roundtable in San Diego.
“The purpose here is to speak with one loud, clear voice on behalf of financial planning professionals,” said Marilyn Mohrman-Gillis, managing director of public policy and communications with the board. “Our position is we are firmly in the camp that setting up a whole new organizational bureaucracy is not the right solution. We need to increase examinations of investments advisors. The SEC has 70 years of experience overseeing advisors. We think the SEC is the adequate body to do that and that the SEC needs to be funded to do that.”
In this matter, the CFP Board is advocating on behalf of a three-way coalition, including the FPA, NAPFA and itself. Together the three bodies represent 75,000 financial planning professionals.
As required by the Dodd Frank law, the SEC conducted a study on enhancing investment advisor examinations to keep a check on advisors in the wake of the Bernie Madoff scandal. Released in January, that study includes three options for increased oversight: increase its own ability to conduct examinations, create a new self-regulatory organization (SRO) or grant the power to FINRA, the SRO overseeing broker-dealers. The ultimate decision will fall to Congress.
In another Dodd Frank matter, the board reiterated the long-held position of the coalition that the SEC should move forward with establishing a uniform fiduciary standard of conduct for broker dealers and IAs who provide personalized investment advice.
This move is opposed by NAIFA, the national association of insurance and financial advisors. NAIFA has also backed FINRA in its campaign to become the new SRO overseeing financial advisors.
“We are up against the insurance industry that’s been around for 100 years or more. We’re up against Wall Street,” said Kevin Keller, chief executive officer of the board, who works in Washington D.C. and has a close-up view of lobbying efforts. “I sit right on K Street and watch truck loads of money going to Capitol Hill seeking to influence these arguments.”
The good news, the board's leaders said, is that the coalition has begun to work together to exert influence of their own.
“I think it’s nothing short of amazing what we’ve done,” Keller said, “and it’s nothing short of the power of the ideas we’ve had. Three and a half years ago, the three leading organizations in financial planning barely even spoke to each other. I think this is a huge success.”