April 29, 2002

Regulate CFPs?

A new FPA white paper will lay out the options

It won't be released to the public for another month or two, and the details are being closely guarded, but Financial Planning Association officials hint that a new FPA white paper will address such thorny issues as the definition of financial planning and how--or whether--it should be regulated.

"This paper will be about the landscape," association Chair Guy M. Cumbie told Investment Advisor during the annual FPA Retreat in a Houston suburb in late April. But the white paper will not "reach conclusions on how or if we should be regulated," he adds. Instead, said President Robert Barry, it is intended to be "the spark that may create a dialogue."

Indeed, the long-running quest to turn the designation of certified financial planner into a legally defined professional designation akin to doctor, dentist, or lawyer showed no sign og slowing down during the Retreat's panels and schmooze sessions. During the "Knowledge Caf?" discussion session that wrapped up the retreat on April 29, some FPA members called for giving the Certified Financial Planner Board of Standards more teeth to police offenses in the planning industry.

"Do we want to have a SRO [self-regulatory organization]?" like those for securities dealers or physicians, asked one FPA member. And if so, who would run it--the FPA or the CFP Board? Elaine Bedel, chairman of the CFP Board, responded that "the Securities & Exchange Commission tells us as long as the CFP Board is doing the job it is doing today, we don't need another regulatory body. Be careful what you ask for," she cautioned, noting that placing financial planners under their own set of regulations opens the profession up to the possibility of being governed by 50 separate state bodies.

Nonetheless, the debate over regulating planning on its own, as opposed to the current system of financial regulations based partly on products, is likely to grow even more fierce after the FPA lays the options out for all to see.

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