More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
The Financial Planning Coalition is glad to see Bob Clark's vociferous advocacy of a fiduciary standard of care for individuals who dispense financial planning advice (Clark at Large: The Riddle of the CFP Board,IA January 2010).
Less gratifying is Mr. Clark's inability to let go of the past.
Mr. Clark's comments are backward focused on a time when there was lack of unity, vision and purpose among the financial planning organizations and within the profession. Thankfully the world has changed and the Financial Planning Association, the National Association of Personal Financial Advisors, and CFP Board are not locked in the past but have set truly forward-looking goals for the financial planning profession.
Today, FPA, NAPFA, and CFP Board are solidly and equally united behind a vision for the future of the profession: that financial planning services are delivered to the public with fiduciary accountability and transparency; that financial planners meet essential competency and practice requirements, that the public can easily identify financial planners who meet competency and fiduciary requirements and that the public views financial planners as a legitimate and accepted profession.
As Mr. Clark correctly points out, the current debate on Capitol Hill offers a rare opportunity to help shape financial regulation.
The Financial Planning Coalition is working to achieve these goals through two related legislative efforts. First, we are working with a broad group of consumer, public interest and industry organizations to insure that the principles-based fiduciary standard of care that applies to advisers under the Advisers Act is extended to broker-dealers who provide investment advice. Contrary to Mr. Clark's assertion, our united endorsement of a "broad and unambiguous" fiduciary duty of care is non-negotiable: if you give investment or financial planning advice, you have to do so as a fiduciary. No ifs, ands or buts and no matter how you are compensated.
Second, the Coalition is seizing upon the financial reform effort in Congress to advance the profession of financial planning and protect consumers. The Coalition is seeking legislation to create an oversight board to set standards of conduct for financial planners, including a true fiduciary standard. Under the Coalition's proposal, anyone who calls him or herself a financial planner would be required to meet competency standards and adhere to the fiduciary standard of care. This would allow consumers to identify those financial planners who are competent and ethical financial planning professionals, and weed out those who are using the term "financial planner" as a marketing tool primarily to sell financial products or increase their bottom line.
Mr. Clark's commentary is rife with additional inaccuracies, but his assertion that CFP Board has "hijacked" the Coalition is particularly irresponsible. It impugns the integrity, dedication and vision of all three organizations that are equally united in our efforts to achieve common goals for the profession and the public. We invite Mr. Clark to look forward with us toward a new vision for the profession: a future in which financial planning is a regulated and recognized profession, providing service to the American public with fiduciary accountability and transparency.
Tom L. Potts, Ph.D., CFP
William T. Baldwin, JD
Robert J. Glovsky, JD, CFP
Chairperson, CFP Board