“It’s going to be a very active year,” in Washington, says Kevin Keller, CEO of The Certified Financial Planner Board (CFP) of Standards.
Indeed, as Keller and other Washington observers note, the investment advisory industry will be watching carefully as the Securities and Exchange Commission (SEC) hands its studies on fiduciary duty and enhanced advisor exams to the new chairmen of the House Financial Services and Senate Banking, Housing, and Urban Affairs Committees in January, and as these new chairmen go about implementing Dodd-Frank.
As Keller notes, too, also due to the SEC in January is the Government Accountability Office’s (GAO) report to Congress regarding the regulation of financial planners. The Financial Planning Coalition, which includes the CFP Board, NAPFA, and the Financial Planning Association, “has been working closely with the GAO to make sure they understand the perspective that we have.”
The Coalition’s proposal “as Dodd-Frank came together has been to create a financial planner oversight board, not necessarily an SRO, but an oversight board that would set baseline standards and impose a fiduciary duty on anybody that says they are providing financial planning.”
Keller says he hopes the three Congressional committees and their chairmen with oversight over the GAO study’s results—which includes Rep. Spencer Bachus, R-Ala., of the House Financial Services Committee; Sen. Tim Johnson, D-S.D., of the Senate Banking Committee; and Sen. Herb Kohl, D-Wis., of the Senate Special Committee on Aging—will hold hearings in the New Year based on the study’s results.
Republican Congressmen have voiced their desire to rein in implementation of Dodd-Frank in the New Year, but Greg Valliere (left), chief political strategist at Potomac Research Group, says that while Bachus and Sen. Richard Shelby, the ranking GOP member on the Senate Banking Committee, have an “agenda to water down the financial services bill, nothing significant can get enactment because Obama” has the veto pen and the Democrats still control the Senate.
The New Year will also entail implementing the provision of Dodd-Frank that increases the threshold for the SEC’s oversight of advisors to $100 million in assets from $25 million, resulting in the switching of nearly 4,000 advisors to state oversight.
David Massey, president of the North American Securities Administrators Association (NASAA) and North Carolina Deputy Securities Commissioner, says that much of his attention in 2011 will be focused on “making sure that investors and state securities regulators emerge from the implementation process of the Dodd-Frank Act in a strong position,” particularly as it relates to the SEC issuing new rules applying a fiduciary duty on all financial professionals providing investment advice.
Massey says NASAA’s attention will also be focused on “doing all we can to ensure that the switch to state regulation from federal regulation…goes as smoothly as possible.” TD Ameritrade Institutional’s quarterly sentiment survey of 500 RIAs, released in late December, found that more than 40% of RIAs prefer to continue to be regulated by the SEC, with 28% preferring the continued role of the states.
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