There have been institutional efforts as well to bring professional help to those who need it. The Foundation for Financial Planning, which was launched 30 years ago, is the only organization devoted to fostering one-on-one pro bono financial planning. And the Financial Planning Association, as part of its own 25th anniversary celebration, is running what it calls the“ 25 in 2025” campaign, which encourages members to take 25 hours this year to provide free, no-strings-attached financial planning advice and education to individuals and families who cannot afford it or don’ t have access.
There is currently little appetite within the government to draw a bright line between advice and sales and give the public clarity, let alone regulate financial planners as proper professionals.
Fiduciary Standards
Professions hold their practitioners to fiduciary duties. Period. Hard stop. And the most important of these duties is to diminish or eliminate any conflicts of interest— specifically when practitioners promote a product or service that creates more benefits for themselves than other options. It’ s not enough to disclose this conflict. Practitioners must obtain informed consent and manage it in the client’ s best interest.
This, of course, can be more challenging for planners who receive commissions than it is for fee-only practitioners. But make no mistake, there is no compensation model that avoids all conflicts of interest.
Most of the people in the financial advice business are investment advisor representatives( or IARs). That means almost everyone is at the very least a part-time fiduciary these days. That’ s a positive for the public, and we have the FPA to thank for it. In the early 2000s, the Securities and Exchange Commission made a rule that exempted the fee-based brokerage accounts of broker-dealers from the Investment Advisers Act of 1940. To protect the idea of the fiduciary standard, the FPA sued the agency to stop the exemption— and it won. Had it lost, likely trillions of dollars would not be subject to a fiduciary standard today.
Aside from investment advice, the government’ s standard for regulation falls beneath that of a fiduciary. The CFP Board expects its practitioners to adhere to fiduciary standards no matter what advice they’ re giving. But it’ s not a government regulator. As a private certifying body, it cannot issue subpoenas, fine people, imprison them, order disgorgement of ill-gotten gains or ban anyone from working in financial services. It only controls someone’ s ability to use its marks.
Given these limitations, the board has to rely heavily on filed complaints to initiate investigations and enforce its standards. Still, the CFP Board is the only body I see making any effort to have a fiduciary standard applied broadly to all financial advice. The public desperately needs such high standards.
The government seems to be moving in the opposite direction, allowing the line between advice and sales to become blurred. Take Regulation Best Interest, which by virtue of its name suggests a fiduciary standard, yet it doesn’ t enforce one. Or take Form CRS, the customer relationship summary. This document is supposed to clarify the difference between brokerage and advisory relationships, but it does little more than confuse people.
There is currently little appetite within the government to draw a bright line between advice and sales and give the public clarity, let alone regulate financial planners as proper professionals.
What’ s Next? It has taken more than 50 years for financial planning to get to where it is to- day. It may take 50 more years for it to earn the respect as a profession, however. That’ s because, frankly, not enough people in the industry give a damn if it does.
The public will get what it wants and needs, eventually. Demand for planning is only going to increase, and the marketplace will move to where its needs are best met.
Will more people seek the CFP marks? Some people won’ t because you can get clients without the letters. Others will become CFPs just because they think it’ s a good business move, not because they want to join a profession. The same is true for other marks and credentials.
What about you? Regardless of your credentialling, will you choose CE programs based on quality and a desire to improve? Will you do pro bono work, encourage pro bono at your firm, or donate to the Foundation for Financial Planning to support pro bono work around the country? Will you read real academic research and forge relationships with academics to encourage useful research and promote planning as a profession on college campuses?
If more people did those things, then people would get the financial planning profession they want and need and they’ d get it faster.
DAN MOISAND, CFP, has been a recognized advocate for the financial planning profession for more than 30 years. He practices in Melbourne, Fla. Reach him at dan @ moisandfitzgerald. com
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