The CFP Board of Standards leadership provided an update to its public awareness campaign, released a survey of its certificants and affirmed its support for a uniform fiduciary standard for all advice givers on Friday during the FPA Experience 2011 conference in San Diego.
Marilyn Mohrman-Gillis (left), who heads CFP Board’s public policy efforts, spoke forcefully against the argument presented by some broker-dealer and insurance associations that extending a fiduciary standard to all providers of financial advice to individuals would reduce investor choice, and hurt in particular the middle class. The idea that extending the fiduciary standard would reduce choice, she said, “is baloney.” That argument, which she said comes primarily from the insurance industry, is “completely fallacious,” though she admitted that the argument “has legs” in Washington. The argument is also misleading, she said, since an exended fiduciary standard wouldn’t preclude broker-dealers and their representatives from receiving commissions or even selling proprietary products. Board CEO Kevin Keller pointed out that many of the larger broker-dealers have already found a way to incorporate a fiduciary standard into their operations.
While some have argued that the SEC should conduct a cost benefit analysis (CBA) of extending the fiduciary standard, Mohrman-Gillis said that while the SEC should conduct such an analysis, “there’s plenty in the record already to support a rulemaking” by the SEC on the standard. And while the recent court ruling voiding the SEC’s proxy access rule was based on the failure of the Commission to conduct a CBA on that rule, she pointed to the irony of Rep. Spencer Bachus’ draft bill calling for an SRO for advisors, which itself does not include a requirement for a CBA on establishing an advisor SRO.
As for the prospects of a self-regulatory organization for advisors, Mohrman-Gillis said that the Board and its partners in the Financial Planning Coalition (the FPA and NAPFA) are “firmly in the camp that setting up a whole new bureaucracy is not the solution. The SEC is the proper regulator” for advisors, but the Commission must be funded adequately, she said, to meet its responsibilities. “An advisor SRO concept is not necessary,” she concluded, pointing out that the proposed SRO would oversee state-regulated advisors, which would have a “huge impact on our profession.”