Below are some simple points to help guide your discussions with clients, media, or the general public.
1) Financial services laws were largely written during the Great Depression along roughly two tracks:
- Investment advice
- Imposes a fiduciary requirement on the adviser to act solely in the best interests of the client
- The sale of financial products
- Imposes a lower "suitability" standard
2) Financial planning evolved later in the 1960s to provide a wide range of advice oriented towards guiding Americans toward long-term and lifelong financial goals. Financial planners are unregulated as a profession.
3) Gaps in the current laws and regulations allow anyone to call themselves a financial planner or advisor without appropriate competency and ethical standards.
4) There is widespread confusion over what various titles mean and in some cases consumers have been defrauded by people claiming to be financial advisors.
The Financial Planning Coalition has proposed establishing a financial planner oversight board that would set professional standards for individual financial planners, set baseline competency, and require a fiduciary standard of care for clients.
Benefit to the Client
- Like going to a doctor or CPA, a client could be certain that a planner has a minimum level of education and competency
- Be able to confide in a bona fide fiduciary, not a financial products salesman
- Be able to determine if client complaints have been filed against a planner
- Be assured that the services provided are of legitimate value
Benefits to the Financial Planning Profession
- Legitimize the financial planning profession by setting uniform standards of competency and client engagement
- Increases the value of the financial planning title in the public's eye
- Encourage more individuals to seek financial planning advice by increasing the public's confidence in the value of the services