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Financial Planning > Tax Planning

Black and White: The Financial Planning Coalition

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Gosh, sure sounds like the FP Coalition thinks I really missed the bus on the Financial Planning Act of 2010 (see their response to my March 15 blog “True Colors”).

Ouch! Silly me; I thought simply reading the Act itself–which they reportedly wrote, and have unequivocally supported–would provide a fairly clear picture of their positions. Who knew? I’ll get in touch with those folks as soon as I can, so they can set me straight, and faithfully report back on how they’ve persuaded me to change my views.

In the meantime, why don’t you make up your own mind. Here are the various places the Coalition felt I fumbled the ball, along with the relevant passages from the FP Act itself: They seem to pretty much speak for themselves. But, hey, what do I know?

Coalition: “The Kohl proposal was never designed to take over the world. Only those who hold themselves out as a financial planner would have been[required] to register.”

The FP Act: “Sec. 303 (3): The term ‘financial planner’ means–(A) an individual who– (iii) provides, or offers to provide, directly to individuals advice with respect to the management of financial assets in not fewer than 2 areas of financial planning, including–(I) investment planning; (II) income tax planning; (III) education planning; (IV) retirement planning; (V) estate planning; (VI) risk management;

My Comment: Anyone who offers advice regarding financial assets in any TWO of those six areas? And that would be whom: brokers, insurance agents, tax accountants, estate attorneys, pension advisors, trust officers, private bankers, and Schwab Customer Service reps? You do the math. Sounds like a pretty substantial portion of the financial services industry to me.

Coalition: “Additionally, the Financial Planning Coalition has consistently insisted that financial planners must adhere to the fiduciary standard as defined in the Investment Advisers Act of 1940.”

The FP Act: Sec. 306 (a) (2) Professional Standards–(C) ETHICAL STANDARDS.–”A financial planner oversight board shall establish ethical standards that–(ii) require each registered financial planner to adhere to a fiduciary standard in dealing with clients as applied under this title.”

My Comment: Notice that the Financial Planner Act doesn’t say anything about the ’40 Act. What’s more, notice that the Coalition’s comment doesn’t say anything about eliminating the “broker exemption,” which they have also stated supporting. So which is it: Does the Coalition support “a fiduciary standard” (whatever that means), or “the fiduciary standard as defined for the Investment Advisors Act of 1940″ the way it stands now; or a fiduciary standard as in the ’40 Act sans broker exemption? And they call me confused? If deeds speak louder than words, what they put in the new FP Act of 2010 is the best indication of what they mean, despite any backpedaling to the contrary they might do now.

Coalition: “Bob Clark ignores the facts and misrepresents the truth surrounding the Financial Planning Coalition and its push to enact legislation that will finally establish minimal regulations for financial planners…”

My Comment: “Minimal Regulations”??? Not the same as existing standards for CFPs, that have taken 40 years to create and refine? Should the Coalition get its way, and “Registered Financial Planner” become the professional standard for all financial planners, what’s your CFP going to be worth? If that’s not “CFP Lite” then I guess I really don’t “get it.”


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