The U.S. Senate Committee on Banking, Housing and Urban Affairs sent the “Restoring America’s Financial Stability Act” to the Senate floor on Monday with a key change that would weaken an effort by Sen. Herbert Kohl (D-Wis.) to create a financial planning oversight board and to impose a fiduciary “standard of care” on all sellers of retail investment products.
While the Financial Planning Coalition – made up of the Certified Financial Planner (CFP) Board of Standards Inc., the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA), had lobbied hard for the creation of an oversight board in an effort to upgrade planning industry standards, the bill heading to the Senate floor does not call for the creation of the oversight board. Instead it merely adopts Sen. Kohl’s call for the Government Accountability Office to examine current oversight of the financial planning industry at the federal and state level. The Financial Planning Coalition’s efforts have been opposed by broker-dealers, insurance agent groups and investment advisors.
Sen. Kohl said after the amendment that the study would not only help expose any gaps in state and federal regulations, but also look at the use of designations being used to take advantage of consumers.
When I interviewed Dr. Larry Barton, president and CEO of The American College, for a cover story in the upcoming April issue of Life Insurance Selling, he had plenty to say on the matter. While Barton said he is actually in favor of a fiduciary standard, he says the puzzle that’s created with the Financial Planning Coalition is one of provability.
“How do I prove to you that I put your best interest above my own without searching and scanning for every potential product and seeking what could be thousands of quotes on a single product?” Barton said during the interview. “And what that will do is add to the cost of underwriting, the cost of product placement, and ultimately it will end up in a skyrocketing situation of cost for the consumers we’re seeking to protect.”
Much more from Dr. Barton to come in the April issue.
More blog entries from Brian Anderson.