Advocates of stronger protections for clients of financial advisors have been disappointed on two fronts. First, by the Securities and Exchange Commission’s inaction on its 2010 Dodd-Frank mandate to create a standard for brokers that is “no less stringent” than the ’40 Act standard for RIAs. And second, by the potential gutting of the Labor Department’s attempt to create “best interest” protections for retirement investors.
In response, some observers (including this one) are reluctantly concluding that Washington may not be the best venue for increasing retail investor rights.
To get an idea about how this goal might be accomplished, I spoke with 30-year independent financial advisor Michael Zmistowski, principal of Financial Planning Advisors in Tampa, Florida. Michael not only advocates a radical approach to the problem but is making significant strides toward its implementation.
Articulate and insightful, Michael has used his considerable skills to advance the financial planning profession — and investor protections — along two fronts in recent years.
First, as a member of the Financial Planning Association’s Tampa Bay chapter, he was part of a group of financial planners tasked with meeting with Florida state regulators in Tallahassee about increasing retail investor protections.
While the meetings were cordial, Michael quickly realized that his group was “not representing enough advisors to get the attention of the regulators. We were getting nothing as FPA of Tampa Bay.”
As a result, Michael began advocating for a radical solution: organizing all eight Florida FPA chapters into one large group. “That way, we’d have more influence over state regulators,” he said.
“Initially, the national FPA wasn’t keen on the idea,” the advisor explained. “But we forged ahead, and our access and influence in Tallahassee has increased so dramatically that they came around. Not only has national [FPA] provided the Florida chapter with an executive director on their payroll, they are using us a model for other state organizations.”
(The FPA recognized the cooperative in 2007, when the group’s name became the Financial Planning Association of Florida.)
“Most of us in the industry have come to the conclusion that action at the federal level is so unlikely that we have to defer to the state level,” he stated. “State regulation is going to play a big role in the future.”
On his second front, Zmistowski says he was instrumental in convincing the University of South Florida to create that state’s first personal financial planning program. He did so by putting together a panel of “41 folks from all parts of financial services.” In addition, he worked with St. Petersburg, Florida-headquartered Raymond James Financial to donate some $200,000 to get it started.
“This isn’t a program for taking the CFP exam,” Michael said. “It’s a degree program to graduate fully qualified financial planners.”
The USF program has formed its own FPA student chapter. “The kids love going to chapter meetings,” Zmistowski explained. “It’s uplifting to be with these kids, who are so great and so enthusiastic. We had 10 at last night’s chapter meeting.”
Michael has been encouraged by TD Ameritrade Institutional’s sponsorship of 56 students from 28 financial planning schools, who attended the firm’s recent national conference. “They pay for their stay and give them [conference] jackets to wear, so attending advisors [can] take the time to talk with them,” he said. “And they created special training sessions for them with professional advisors and industry executives.”
As much fun as it was to talk with Michael, it’s also sobering to see how much of a difference people can make. “I love CFP education and the continuing education requirement,” he said. “That’s why CFP is important to me.”