COVER STORY
“ We ’ re not touching licensing , we ’ re not touching regulation , per se . This is just documenting , wherever we need to , the phrase ‘ financial planner ’ and giving it the title and protection it deserves .”
— Patrick D . Mahoney , CEO , Financial Planning Association
was good news . However , he noted the lack of specificity about who the FPA was going to lobby and who it was going to lobby for — as well as when and how and what yardsticks the group would be using to bestow the name “ financial planner ” on any given professional — left many unanswered questions .
The XY Planning Network itself notably took the battle to the SEC in a petition last year . In September 2021 , the network filed two petitions asking the SEC to reconsider a rule it proposed in 2007 about financial planning titles and the automatic triggering of fiduciary investment adviser registration . The network also called on regulators “ to modernize Section 208 ( c ) of the Advisers Act and better define in today ’ s environment what constitutes ‘ investment counsel ’ services that would necessitate not just registration as an investment advisor but a requirement to principally be in the business of advice in order to market one ’ s services as such .”
Kitces noted on Twitter : “ In the end ‘ title protection ’ almost inevitably requires some regulator to license the term ( so those not eligible are restricted from using it ), and some regulator to enforce it ( so standards and their regulatory burden are inevitable ).”
He also noted that the FPA was silent about making the CFP marks the benchmark for the “ financial planner ” title , even though the association is a membership for CFPs . “ Is FPA really considering some other / additional designation to rally around ?”
Youth And Its Discontents
Thompson , the former FPA lobbyist ( and now a senior policy analyst at Fi360 and president at Potomac Strategies ) says the youth of the industry is part of the problem . Financial planning as a profession emerged from a welter of different talents and professions once governed under different regulatory regimes , when people of diverse backgrounds , including insurance agents and stockbrokers , melted out of the woods to form a new profession in the ’ 80s and ’ 90s . ( He notes that a lot of the profession ’ s creation had to do with the fallout of the 1986 tax reform , when a lot of newly useless tax shelters had to be scuttled and clients sought help and answers from their “ financial counsel .”)
“ Financial planners were Johnny-come-latelies ,” Thompson says , “ after most of what services they provide were regulated under other regulatory silos . A lot of them came out of the insurance industry because their clients had sophisticated questions that kind of bridged the area between estate planning and investment planning and insurance issues .”
Existing laws on the books didn ’ t seem to address this new type of pro , Thompson says . The name “ stockbroker ” fell out of vogue , and more generic names popped up , he says , while professionals settled on “ financial advisor ” and “ financial planner .”
The Advisers Act of 1940 was specific in describing only the phrase “ investment counsel .” The
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