Senator Herb Kohl (D-Wisconsin), a member of the Senate Banking Committee, has proposed adding a new draft amendment to Senator Christopher Dodd’s financial services reform bill that would create an independent oversight board to regulate financial planners.
Senate Banking Committee Chairman Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, has ended bipartisan talks as of March 11 on his financial services reform bill, which he now plans to release on Monday, March 15. Dodd said in a release that he plans to hold a full committee markup the week of March 22.
Jaret Seiberg, an analyst with Washington research firm Concept Capital, says that “we expect Dodd’s draft will propose a tougher Consumer Financial Protection Agency (CFPA) than the market has been expecting.” Dodd, Seiberg says, “is not expected to include a requirement that the banking regulators approve what the CFPA proposes. That raises the prospect for an out-of-control CFPA that forces banks to take unprofitable actions. While this is a short-term risk, we believe the final draft will be much more moderate. Dodd must take some radical positions at the committee level so he has room to negotiate with [Senator Richard] Shelby before full Senate action on the bill.”
The Financial Planning Coalition–comprising the Financial Planning Association (FPA), the National Association of Personal Financial Advisors (NAPFA), and the CFP Board–has been lobbying members of Congress to support the idea of creating an entity that would regulate financial planners. The independent oversight board under Kohl’s amendment would be housed within the Securities and Exchange Commission, and it would be up to the SEC to appoint members of the oversight board.
Kohl’s proposed amendment would expand the definition of financial planner to include investment advisors and brokers and “anybody who holds himself out to the public as a financial planner and provides, or offers to provide, directly to individuals advice with respect to the management of financial assets in not fewer than two areas of financial planning, including–investment planning, income tax planning, education planning, retirement planning, estate planning, and risk management.”