Consumers depend increasingly on financial planners and may be unsure about when a professional is required to act in their best interest. Yet there is no need to design a special regulatory body for the profession right now, based on available information, the Government Accountability Office said in a report released on Tuesday.

The extent of problems related to financial planners is not fully known, the GAO said. The Securities and Exchange Commission, which oversees financial planners under applicable rules for registered investment advisors, does not track data on complaints, examination results, and enforcement activities associated with financial planners specifically. Further, federal and state agencies have regulations on marketing and the use of titles and designations that also can apply to financial planners, according to the report.

Congress required the GAO to study the oversight of the financial planning profession, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is one of two reports. The other, more closely watched study, whether the fiduciary standard of care should be required for all financial advisors, is expected later this week. 

The GAO solicited input from several agencies that oversee various components of the financial advisor industry, including the National Association of Insurance Commissioners and the Securities and Exchange Commission.  It found that most of the regulatory agencies and financial services industry representatives did not favor major changes to the way financial planners are governed.

The CFP Board of Standards, however, does track complaints, exam results and enforcement activity for the 62,000 current CFP certificate holders it oversees. In the context of its role in the Financial Planning Coalition, the CFP Board’s leadership is undaunted by the GAO’s findings. 

“We had higher aspirations,” Charles A. Moran, CFP, the 2011 chair of the CFP Board of Standards said in a telephone interview on Tuesday. “The report did not meet our highest aspirations.”

The upshot, though, is that the report recognized that financial planning exists as a profession, which is a good starting point. Moran also viewed the GAO’s observation about the scant information on the extent of problems related to financial planners as an opportunity.

“That is something we, and others, will have to address,” Moran said. “We are encouraged and ready to continue the efforts we’ve put in.” 


The leadership at the National Association of Insurance and Financial Advisors (NAIFA) concurred with the GAO’s findings. “State and federal regulations already cover the vast majority of the services provided by financial planners,” Terry Headley, president of the NAIFA said in a statement. Those services include preparing financial plans and providing insurance products, securities and other investments. If professionals were subject to additional regulation, it “would not only be unnecessary, but could also hinder the ability of advisors to effectively serve consumers.”


In the 51-page report, the GAO also called for the SEC to assess consumers’ understanding of the myriad professional designations conferred to financial planners. It noted that although the regulatory system covers most financial planning activities, enforcement of regulation may be inconsistent and some questions exist about consumers’ understanding of the designations that financial planners may have.


“Policymaking is a long process. It is a marathon, not a sprint,” said Marilyn Mohrman-Gillis, managing or public policy and communications at the CFP Board of Standards. “We think this GAO report is a big step toward recognizing all of the core problems, and all of the reasons we said why financial planners should be regulated.”


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