More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
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