The Financial Planning Association’s push for a universal fiduciary standard was a common topic of discussion during the FPA’s annual conference
that wrapped up in Denver on Tuesday.
The conference’s workshop schedule was top-heavy with fiduciary standard-related topics, and FPA president-elect Marty Kurtz, CFP, AIFA, devoted much of his time during the closing general session talking about how remarkably close we are to having a “true fiduciary standard” become a reality.
At every turn, FPA leadership took the opportunity to speak out about the FPA’s leadership role in the “fiduciary movement,” and noted that the association has already taken the proactive step of developing the first phase of a fiduciary education program
focused specifically on the process and decisions involved in delivering financial planning. This is in anticipation that all financial planners and investment advisors will need to provide services at a fiduciary level in the near future.
The conference program included workshops such as, “Code of Ethics: Acting Like a Fiduciary Under CFP Board Rule 1.4” and “Defining the FPA’s Fiduciary Ethos,” plus a panel discussion titled, “Living in a Fiduciary World.”
FPA leadership also made attendees aware of the association’s efforts to protect the use of the title “financial planner” and enforcing sanctions against “those who abuse it.”
When President Obama signed the Dodd-Frank financial reform legislation
into law on July 21, two major initiatives that could transform the way financial advice is regulated were put in motion.
First, a study by the SEC about the obligations of brokers, dealers and investment advisors toward their clients is likely to result in new rules imposing a fiduciary duty on all professionals who dispense personalized investment advice. SEC Chair Mary Shapiro has been an outspoken proponent of a universal fiduciary standard.
Second, the Government Accountability Office (GAO)
, the investigative arm of Congress, will provide a report on its financial planning study on Jan. 17, 2011, to the Senate Banking Committee, Senate Aging Committee and House Financial Services Committee. The report will examine the current state and federal oversight structure and regulations for financial planners, which will result in recommendations to Congress of any legislation needed to close regulatory gaps and protect investors and consumers.
It seems most observers believe the SEC will impose a fiduciary duty upon broker-dealers and insurance agents who provide investment advice. What remains to be seen is how much this will drive up the cost of compliance, which will in turn be passed along to the consumer.
If or when this happens, the obvious question becomes: Will the cure be worse than the disease?