Asset Planning, Inc Blog
Financial Planning Regulation
Senator Kohl (D-Wisc) has added a provision to the financial reform bill to regulate financial planners. This important provision will fill a significant regulatory gap and provide consumers with the ability to identify qualified financial planners who can help them make sound financial decisions on their path to the American dream. As a financial planner, I urge you to support this needed consumer protection reform.
Currently, financial planners are unregulated as a profession. Instead, they operate under a patchwork of regulation that allows hundreds of thousands of people to hold themselves out as financial planners without meeting baseline competency, practice, or ethics requirements. Because there are currently no standards or regulations prescribing who can identify themselves as a financial planner, incompetent and unethical people have free reign to call themselves financial planners. Many of these individuals have given bad advice, engaged in unethical behavior, and even committed outright fraud, costing consumers huge financial losses and further diminishing confidence in the American financial system.
One example involves a so-called financial planner who sold a 90-year-old man a fixed annuity that could not be cancelled for 13 years. Individuals such as these take advantage of the goodwill created by legitimate financial planners to profit from unsuspecting consumers. New standards with clearly defined requirements for becoming a licensed financial planner will help the public identify qualified financial planners and prevent these types of abusive practices.
The Financial Planner provision would establish a professional oversight board for financial planners. The board would require financial planners to pass a competency examination and meet ethical standards, and would have the power to discipline those who fail to meet the standards. In order to better protect the public, the oversight board would make information about licensed financial planners available to consumers so they can better evaluate a financial planner before hiring one. The ability of consumers to identify a competent and ethical financial planner is a key component to restoring consumer confidence and financial health.
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