As the New Year unfolds, one thing is certain: financial services regulatory reform will be hotly debated in the 111th Congress, and perhaps some reforms will actually be put into place. As Melanie Lubin, Maryland’s Securities Commissioner, noted recently, “We face a new reality: It’s clear that this crisis is going to create a new regulatory system.”
Change is definitely coming, and not only in the form of financial services restructuring. As the Obama Administration is ushered in at the end of this month, we can expect “100 days of rapid fire” as Obama and his team focus on solving the “economic crisis, jobs, tax cuts (Obama will let the Bush tax cuts expire), infrastructure programs, as well as incentives for energy,” said Roel Campos, the former SEC Commissioner who is also a member of Obama’s economic transition team, at the Investment Advisor/Moss Adams Advisor Summit in Washington on December 2. Campos, currently the partner-in-charge of Cooley Godward Kronish’s Washington, D.C. office, said that the new Administration does indeed want to tackle restructuring of financial services regulation. Having a “sane regulatory world,” Campos said, is one way to help solve the current economic crisis.
To be sure, the reworking of the financial services regulatory landscape has been anticipated by the leaders of three of the top financial planning organizations–CFP Board, the Financial Planning Association (FPA), and NAPFA–and has compelled them to join forces to lobby Congress on how such reform should be implemented when it affects the financial planning profession.
Kevin Keller, CEO of CFP Board, says that the “buzzwords” being bandied about on “K Street, Capitol Hill, and at the SEC” is that when it comes to reforming financial planning services, Congress is debating some type of “harmonization or a universal standard of care.” The concern among the three planning groups, Keller says, is that those words are “in effect a euphemism for a lower standard of care. We think it’s in the best interest of the public that financial planning services be provided at a fiduciary level and at a level that requires a high level of competence.”
When the 111th Congress convenes, Keller says, “financial services reform is one of their top priorities.” The economic crisis, he says, was “clearly not caused by financial planners; what we do know is that if the financial intermediaries that got us into this mess were putting the best interests of their clients first, we probably wouldn’t be in this situation.” So the three planning groups want to “make sure that in any movement or legislation that might seek to impose some uniform standard of care, that the interests of the public are represented and protected and that financial planning doesn’t get swept up in some broad legislation.”
The top executives of the three groups held their first “exploratory” meeting on December 3, and while no date has been set for the next meeting, Keller says “there is work happening at the staff level” of each organization. “We’ll be continuing to work with the other two groups.”
Meanwhile, Back in the States . . .