Financial Planning Coalition Has Its Hands Full Promoting The Fiduciary Standard And Protecting RIA Oversight

Monday, November 07, 2011 06:35
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Financial Planning Coalition Has Its Hands Full Promoting The Fiduciary Standard And Protecting RIA Oversight

Tags: CFP Board

CFP Board of Standards leaders recently gave the industry a frank take on how well fee-only advocates are getting their message out on Main Street and Washington alike.

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Chuck Moran, chairman of the Board, seems most focused on getting the financial planning message to retail investors.

 

He's got quite a bit to say about how his team is working in the FPA and NAPFA --  forming the Financial Planning Coalition -- to get the SEC to extend the fiduciary code to brokers.

 

But that effort seems stalled until at least 2012, simply because the SEC has so much else on its plate.

 

Meanwhile, the Coalition is taking the fight to the public by running free planning days and building new promotional websites.

 

If retail investors demand a fiduciary relationship -- and let potential advisors know about it -- then some brokers may be more motivated to switch models on their own.

 

The problem, of course, is that all that marketing is in vain if the final rules boil down "fiduciary" duty to letting your clients know you're acting to enrich yourself at their expense.

 

In that scenario, spending money to boost the "fiduciary" brand is a zero sum game.

 

Getting the SEC to impose a real fiduciary standard -- no conflicts of interest at all -- would create real change in the industry.

 

And as for the campaign to move RIA supervision to FINRA or some other self-regulatory organization, I'm not sure the CFP Board understands just what a huge concern this is for SEC-registered advisors.

 

They seem to think the proposal will die in the Senate.

 

That might be so, especially with an election year coming up fast to distract just about everyone.

 

But let's hope all the same that there's a lot of lobbying behind the scenes to protect RIAs from being handed to a group that many think is actively hostile to their business model.

 

Maybe we just don't see it.

 

 

 

 

"While we've been urging the SEC to get started with the fiduciary rulemaking, it now appears that it will be pushed off until next year," he said.

Among the reasons for the holdup is the SEC's uncertainty over how to conduct a reliable cost-benefit analysis of the impact of a uniform standard, an area where the CFP Board and its allies in the Financial Planning Coalition are hoping to contribute.

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