Author Archives: Lesly Fulop

Financial Planning Coalition Statement on FINRA Investor Protection Survey

The Financial Planning Coalition issued the following statement regarding a recent FINRA survey that confirms the findings from original research conducted by the Financial Planning Coalition. Both FINRA and the Coalition’s findings indicate that investors support more government oversight of investment advisers and appropriate regulation to safeguard themselves from adviser misconduct.

“The Financial Planning Coalition urges Congressional leaders to make investor protection and the provision of ethical financial advice priorities in 2015. Providing the Securities and Exchange Commission’s (SEC) with the funding it needs to fill dangerous gaps in investment adviser oversight should be Congress’ first order of business. In the absence of this increased funding, however, Congress should pass bipartisan legislation authorizing the SEC to collect user fees from registered investment advisers in order to increase the alarmingly low frequency of examinations.”

NEW COALITION RESEARCH: Amid Surge in Demand for Financial Planners, Consumers Are Harmed by Lack of Appropriate Regulatory Standards

WASHINGTON, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – today released a white paper featuring comprehensive quantitative and qualitative research shining a light on the insufficient regulatory standards for financial planners. Drawing on both new research and analysis of existing industry data, the Coalition concludes that consumers are harmed by the lack of appropriate regulatory standards for those who hold themselves out as “financial planners,” but provide narrowly focused advice, single-product solutions, or advice that is not in the consumers’ best interest.

The Coalition’s research and analysis is a comprehensive response to the 2011 Government Accountability Office (GAO) study regarding oversight of financial planners and the professional designations they use to market themselves to consumers. The GAO concluded that no additional regulation specific to financial planners was warranted at the time.

“When the GAO conducted its study of gaps in the regulation of financial planners, it operated under an aggressive, Congressionally-mandated timeline that provided little opportunity to conduct the necessary original research to thoroughly address the issue,” said the Coalition. “Now, however, combining our research with an analysis of industry data not available in 2011, it becomes clear that common sense regulatory standards for financial planners are needed to protect consumers.”

As millions of “Baby Boomers” head toward retirement, consumer demand for competent, ethical, and integrated financial planning advice is surging. The current regulatory framework, however, takes a piecemeal approach and is weakened by significant regulatory gaps at the federal and state levels. Such a regulatory framework that only protects consumers in limited circumstances and during limited timeframes does little to instill public confidence in an arena dominated by confusing titles and those who profit from using them.

Financial service providers are free to hold themselves out as “financial planners,” but only provide more narrowly focused advice to consumers, such as investment, securities, or insurance services. Consumers need and expect financial planners to provide competent, holistic advice that takes into account the impact of that advice across a broad range of financial subjects (retirement, investment, tax, insurance, education, and estate planning) and is provided under a fiduciary standard of care.

There currently is no uniform regulation that imposes rigorous competency and ethics standards on those offering financial planning advice to consumers. One state securities regulator, highlighting this disparity, remarked, “[We] can suspend brokerage licenses right and left, but there’s nothing to prevent these people from turning around and becoming financial planners.”

The absence of comprehensive regulatory standards harms consumers because it prevents them from being able to identify competent and ethical financial planners. For example, according to new research conducted by Fondulas Strategic Research on behalf of the Coalition, there is significant consumer confusion about the various titles associated with financial planning. The research shows that 82 percent of consumers believe that a financial planner is the same as a “financial advisor;” 70 percent believe a financial planner is the same as a “wealth manager;” and 68 percent believe a financial planner is the same as an “investment advisor.”

Given this confusion, consumers who are seeking financial planning services are unable to identify true financial planners and face the real risk they will not receive the services they seek. The Fondulas research found that approximately one-third of consumers who worked with an advisor on a financial plan did not receive the financial planning services they were seeking:
• 31 percent received two or fewer services as part of their financial plan,
• 30 percent believe they did not get the services they needed, and
• 27 percent wanted a financial plan but did not get one.

Consumers are also harmed when those who identify themselves as financial planners fail to provide the financial planning services requested. Data from Cerulli Associates, a leading industry research firm, reveal that in 2013, over 166,000 financial advisors self-identified as members of a financial planning focused practice. Cerulli then verified the practice type by analyzing additional data, and determined that only 38 percent of the self-identified financial planners actually had financial planning focused practices. In other words, over 100,000 financial advisors incorrectly self-identified as being part of a financial planning practice. This gap continues to exist and shows no sign of abating.

The Cerulli data also highlight the significant financial incentives that encourage many professionals to identify and to market themselves as financial planners, including their belief that advertising financial planning services:
• Increases asset retention (87 percent agree),
• Increases assets under management (83 percent agree),
• Generates greater revenues per client (76 percent agree), and
• Creates additional cross-selling opportunities (71 percent agree).

Although these findings show that consumers seeking financial planning services have difficulty finding a true financial planner and do not receive the services they seek, there is positive news. Additional Fondulas research found that those who work with CFP® professionals – financial planners who have met rigorous competency standards and who have agreed to comply with strict ethical standards – had higher levels of satisfaction, were more likely to say they received a plan with realistic financial goals, and were more likely to feel their financial needs and objectives were addressed.

“American consumers looking for financial planning services face an uphill battle when it comes to identifying a competent, ethical financial planner, and are harmed by the lack of appropriate regulatory standards,” said the Coalition. “Just as consumers expect a medical doctor to have a M.D., a lawyer – a J.D., an accountant – a CPA, they should expect their financial planner to demonstrate expertise, experience, and accountability, and be held to standards the public can understand and trust, as with the CFP® certification.”

For additional information on the Coalition’s research and analysis, please see the white paper, “Consumers Are Confused and Harmed,” as well as a two-page graphic summary of key findings.


Research Methodology

Fondulas Research

In 2013 and 2014, Fondulas Strategic Research conducted a quantitative, online survey of 1,250 consumers from across the U.S. on behalf of the Financial Planning Coalition. To qualify for the survey, consumers were required to be age 25 or older, make or contribute to decisions about household finances, and have a household income of $50,000 or higher. Included in the sample were 496 consumers who have worked with a financial professional in the past five years on one or more financial services goals and 250 consumers who could name the financial professional they worked with. From October 28 to November 11, 2013, Fondulas subsequently conducted interviews with the 496 consumers. Once interviews were completed, Fondulas independently verified the designations for the financial professionals named through online searches and phone calls.

Cerulli Associates Research

Cerulli Associates (CA) conducts the Cerulli Advisor Metrics Reports, an annual series of ongoing research and analysis of the advisor marketplace. The reports focus on advisor trends and consumer information, including market sizing, advisor product use and preferences, and advice delivery. The 2013 Advisor Metrics Report leverages CA’s continuous research and analysis of the marketplace, including proprietary surveys of more than 50 broker/dealers and more than 100 asset managers. In addition, the 2013 report relies heavily on CA’s growing database of advisor surveys, which includes more than 8,000 individual advisor responses to CA’s surveys. The proprietary data in the 2013 Advisor Metrics report is supplemented with government sources (Federal Deposit Insurance Corporation, Federal Reserve, Department of Labor, etc.), as well as third-party sources (Strategic Insight, Morningstar, etc.). CA obtained financial planner data by asking advisors participating in its annual survey to classify their practices – as money managers, investment planners, financial planners, or wealth managers – based on their perception of the services they offer. CA then reviewed the actual services offered (data also obtained through surveys) and the client base of each advisor to determine which classification best reflects the advisor’s actual practice.

Financial Planning Coalition Launches New Website to Inform and Engage Stakeholders for Legislative, Regulatory Advocacy

WASHINGTON, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – today announced the launch of a new website  designed to engage stakeholders in the Coalition’s efforts to educate lawmakers, regulators and consumers on critical investor protection measures needed to ensure financial planning services are delivered in the public’s best interests.

The new website – located at – provides regular updates on the policy issues impacting the delivery of financial planning services to the public, and makes it easier for the Coalition’s nearly 80,000 stakeholders to take action on the issues.

“As the Coalition continues to advocate before policymakers for increased consumer and investor protection in financial planning, we recognized a need to revisit our web presence to more effectively communicate our mission and policy objectives,” said the Coalition. “Our goal is to ensure that the voices of financial planners are heard on the issues of importance to the public and our profession, including the extension of a uniform fiduciary standard of care to broker-dealers and greater investment adviser oversight.”

In addition, the Coalition sought to refresh its branding to better reflect the collaboration and cooperation inherent to this partnership in a distinctive, bold and contemporary fashion. The seal with interlocking letters forming the core of the logo is intended to represent this collaboration, while the color palette incorporates an element of each partner organization’s branding.

Financial Planning Coalition Applauds Rep. Bachus’ Co-Sponsorship of H.R. 1627

Washington, D.C. – The Financial Planning Coalition applauds Rep. Spencer Bachus (R-AL), the Chairman Emeritus of the House Financial Services Committee, for becoming a co-sponsor of H.R. 1627, the Investment Adviser Examination Improvement Act.

This bill, introduced by Financial Services Committee Ranking Member Maxine Waters (D-CA) and Rep. John Delaney (D-MD), would authorize the Securities and Exchange Commission (SEC) to collect reasonable user fees from SEC-registered investment advisers for the sole purpose of increasing the dangerously low number of examinations the SEC currently conducts.

“We commend Rep. Bachus’ decision, as well as the decisions of the 14 additional Members of Congress who have recently signed on as co-sponsors of this important investor protection measure,” said the Coalition. “This support demonstrates that investor protection is not a partisan issue and we expect to see the number of co-sponsors on both sides of the aisle continue to grow.  Further, their decisions highlight that a user fee is a sensible solution to the vexing resource problem at the SEC – a solution that industry supports and that has no impact on the federal budget.  We look forward to continuing to support this legislation and to working with all Members of Congress who want to improve protections for American investors.”

The Financial Planning Coalition is a strong supporter of H.R. 1627 as the most cost-effective, efficient and industry-supported way of providing the SEC with the necessary resources to protect American investors – particularly in light of Congress’ failure to appropriate sufficient funds.  Due to a chronic lack of resources, the SEC currently is able to examine only about nine percent of the approximately 11,000 investment advisers registered with the agency.  This amounts to investment advisers being examined at the unacceptable rate of about once every 11 years.

H.R. 1627 is a targeted solution to the persistent resource gap at the SEC that would: 1) limit the use of collected fees to the SEC’s examination program; 2) require that the SEC determine the fees through a public rulemaking; 3) require the SEC to take into account factors such as the investment adviser’s size and assets under management when determining a fee; and 4) require the Comptroller General to conduct an audit of the funds’ use every two years.

Financial Advisor: SEC Chair White Attacked For Weak Investor Protection

Ted Knutson of Financial Advisor reports that several consumer advocates have forcefully criticized SEC Chair Mary Jo White for slow and weak investor protection rulemaking, including the Commission’s failure to adopt a uniform fiduciary standard.

Excerpt– Securities and Exchange Commission Chairman Mary Jo White was attacked for slow and weak investor protection rulemaking by several consumer advocates in e-mails and conversations with Financial Advisor magazine.

“Investor protection under Chair White has been virtually nonexistent. Her positions in the crowdfunding and private offering rulemakings and her false promises regarding the fiduciary duty reflect a strong anti-investor bent,” said SEC Investor Advisory Committee member and University of Mississippi Law Professor Mercer Bullard on Tuesday.

Investment News: House provides SEC with $50 million budget boost

Mark Schoeff of Investment News reports that the spending bill passed by the House of Representatives on June 16 raises the SEC’s budget by $50 million, but is $300 million less than the SEC needs to strengthen investment adviser oversight. Efforts by Rep. Maxine Waters (D-CA) to attach an amendment allowing the SEC to charge user fees to make up for this budget shortfall were unsuccessful. The bill also includes an amendment barring the SEC from imposing a fiduciary standard on broker-dealers during the federal fiscal year beginning October 1.

Excerpt– The House of Representatives approved a spending bill Wednesday that denies the Securities and Exchange Commission the funding it says it needs to strengthen investment adviser oversight.

In a 228-195 vote, the House passed a $21.3 billion appropriations bill that funds the SEC, Treasury Department and many other agencies. The measure gives the SEC a $50 million budget increase, about $300 million less than the agency requested. Under the bill, the SEC would operate on a $1.4 billion budget in fiscal 2015, which begins on Oct. 1.

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