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June 28, 2011 at 06:05 AM
The cause for a universal fiduciary standard for all retail financial advisors received a couple of much needed booster shots in the arm during the past week or so—and with it, possibly a little brightening of the future of independent advice.
First, last Thursday, the Financial Planning Coalition (comprising the CFP Board, the FPA, and NAPFA), sent a petition to the SEC, urging the Commission to “establish a strong and uniform fiduciary standard of conduct for broker-dealers and investment advisers that is no less stringent than that under the Investment Advisers Act of 1940.” The petition went on to point out that: “Most consumers assume their financial services providers are already required to provide advice that is in their best interest. Unfortunately, this is not the case.”
So far, so good. But also unfortunately, the Coalition then went on to point out that the petition was signed by “thousands of financial planners across the nation,” or to be precise, some 5,200 financial planners. However, when your organization represents 75,000 CFPs, a petition signed by 7% of your constituents kind of makes it look like a lot more planners are against it than for it. Note to FP Coalition: In future communications to regulators, it’s probably better to simply state that you represent the total membership of the FPA, NAPFA, and the CFPs, minus any overlap.
Perhaps in response to this groundswell of support from the financial planning community (hey, it’s possible), the SEC’s chief counsel in the Office of Investment Management made a surprising statement yesterday. Speaking at a regulatory conference in Washington (reported by AdvisorOne Washington bureau chief Melanie Waddell), Douglas Scheidt said that “while he believed the securities regulator would issue a rule putting brokers under a fiduciary mandate this year, the agency would hold off on issuing one on the overall harmonization of advisor and broker rules.”
