The Financial Planning Association says federal regulators ought to do a better job of distinguishing fee-based brokerage services from true financial planning services.

The FPA, Denver, a group that represents holders of the Certified Financial Planner designation and other professional designations, has been clashing with the U.S. Securities and Exchange Commission over the issue for years, and it has gone to court to challenge a move the SEC made a year ago to give fee-based brokers more flexibility.

The court case is still in progress, but the FPA now has submitted a formal letter by Duane Thompson, managing director of the FPA’s Washington office, asking the SEC to revisit the changes the agency made in late 2005.

Thompson notes that some broker-dealers seem to be trying to avoid coming under the Investment Advisers Act by providing isolated elements of a financial plan, rather than a complete financial plan. Thompson asks whether an agent who provides an element of a financial plan should, in fact, come under the Investment Advisers Act.

Thompson also asks the SEC to confirm that a broker-dealer is subject to the Investment Advisers Act when its registered representatives recommend specific stocks, bonds or mutual funds to implement the asset allocation recommended in a financial plan, and he asks for clarification about when the fee-based account disclosures required by the rule must be made to the client.

Some brokerage firms appear to be providing fee-based account disclosures only after customers have signed account agreements, Thompson writes.