The Government Accountability Office has come to the conclusion that financial planners don’t need any more rules and regulations than they have now.
“While no single law governs the broad array of activities in which financial planners may engage, given available information, it does not appear that an additional layer of regulation specific to financial planners is warranted at this time,” according to the study.
One would think that CFPs would be popping champagne corks and celebrating. But of course no, instead, “Members of the Financial Planning Coalition––a group comprised of the Certified Financial Planner Board of Standards, Financial Planning Association and the National Association of Personal Financial Advisors––have been advocating that financial planners be regulated as a distinct profession with fiduciary responsibility overseen by an oversight board under the auspices of the SEC.”
Someone who is going to make a living telling people what to do with their money better be vetted by the government and regulated on an on-going basis to, you know, protect us from shysters out there claiming they know how to develop a financial plan but don’t really know.
Writing for MarketWatch, Chuck Jaffe says “It’s official; your financial adviser, broker or ‘wealth adviser’ is not a professional.” Because, after all, if there are no government standardized requirements that must be obtained in order to call yourself a financial planner, then how can the consumer know if he’s dealing with a pro?
“Technically, a ‘profession’ requires some type of specialized schooling and education, plus standards that a practitioner must pass in order to enter the field,’ writes Jaffe. “Thus, a lawyer can’t practice without passing the bar exam, and that doctor must go to med school and amass experience in order to get their license.”
However, certifications and licensing are just government constructs created to impose barriers to entry in order serving to exclude competition. There is no benefit to consumers. “Occupational licensing has either no impact or even a negative impact on the quality of services provided to customers by members of the regulated occupation. Additionally, as occupations become licensed, members of regulated occupations see their earnings go up,” explains Morris Kleiner.
So don’t look for the Financial Planning Coalition to give up. Ron Rhoades, an advisor who sits on the FPC’s leadership council, called the GAO report one in a “series of stepping stones” toward making financial planning a profession.