Weighing in on the primary political and economic issue now faced by the country, the Financial Planning Association on Monday called on Congress and President Barack Obama to raise the debt ceiling before the August 2 deadline, warning that if the U.S. defaulted on its financial obligations both financial planners and their clients would be seriously affected.
“The full faith and credit of the United States should never be called into question,” said FPA executive director and CEO Marv Tuttle (left) in a statement. Should Administration and congressional leaders fail in their negotiations to raise the debt ceiling, American consumers would face higher interest rates, Tuttle said, and there would be “less capital available for small businesses.”
“This has been a constant point of conversation [within] our membership,” Tuttle said Tuesday in an interview with AdvisorOne, referring to the impact that financial planners could have on the debt and budget deficit issues. “Financial planners have a unique perspective” on these issues, Tuttle said, based on “what they do for their clients every day, and understanding what the trickle-down effect” would be in the event of a default.
“It’s something that the financial planning community needs to step up on—be it debt, healthcare or retirement—and be heard in a much larger way,” he argued. Weighing in on this issue, and other topics of government policy where financial planners can provide perspective, Tuttle said, “makes sense for us to do it because it’s the right thing to do.”
“We’re looking for a little more sanity; we don’t want a severe drop in the stock market to be the cause of getting a deal passed,” Tuttle said in the interview.
Beyond resolving the issue of the debt ceiling, however, the FPA statement called on Congress and the President to “take serious and substantial steps now to address our nation’s grave fiscal imbalance,” arguing that “no financial planner would advise a client with a debt problem to get a larger line of credit without having a commitment and a plan to address the underlying problem.”
Tuttle positioned the issue as one of removing uncertainty from the markets but also taking the longer view. “We have enough problems [already] with confidence in the financial markets,” he said. “Congress has to develop a game plan to get this right. It can’t be a quick fix now; they need to develop a long-term game plan.” Otherwise, he warned, “Every one of us will suffer from the lack of initiative.”