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.”