February 28, 2013

The Financial Planning Coalition is pleased to update you on our work since our last correspondence and present our vision for the coming year. In 2013, the Coalition will build upon its previous efforts to advocate for increased investor protection to foster confidence in financial services and to educate federal policymakers on the importance of competent and ethical financial planners in the delivery of financial services to consumers. The coming year will present us with several opportunities to see continued progress on our priorities.

Recently, President Obama nominated Mary Jo White to be the next Chairman of the Securities and Exchange Commission (SEC). As new leadership considers policy and legislative issues, the Coalition will use this opportunity to hit the ground running by raising awareness about our policy priorities.

Educating New SEC Leadership on the Need to Support a Uniform Fiduciary Standard

The Coalition is actively developing plans to use Mary Jo White’s confirmation as a platform to highlight our advocacy to extend the fiduciary standard to broker-dealers who provide personalized investment advice to retail clients. The Coalition recently issued a media release recognizing her past efforts prosecuting white-collar crime and encouraging her to bring a similar “consumer-first” approach to her work at the SEC. We will also call on her to prioritize implementation of the fiduciary rule during her tenure.

The Coalition will monitor White’s confirmation process closely and assess how the change in leadership at the SEC may affect the issues that affect our stakeholders. We will also continue to use the introduction of a new Chairman as an opportunity to advance our message of the need for investors to be protected by having broker-dealers operate under a fiduciary standard that is no less stringent than the standard that currently applies to investment advisers. Once new leadership is in place, the Coalition will meet with various decision-makers at the SEC to call attention to the issue and urge them to act.

Working with Congress to Enhance Oversight of Investment Advisers

Last year, the Coalition achieved a major victory in Congress when we helped to halt legislation that would have established a new self regulatory organization (SRO) and would likely have put the Financial Industry Regulatory Authority (FINRA) in charge of investment adviser oversight. The legislation would have established a new bureaucracy where one already existed, disproportionately impacted small advisers, and imposed unnecessary and burdensome membership fees on advisers.

While FINRA invested significant resources in its efforts to gain authority over investment advisers in the 112th Congress, its CEO Richard Ketchum announced in early February that FINRA would not proactively seek to establish an investment adviser SRO this year. However, Ketchum’s remarks also signaled that the agency’s step back may be temporary. He warned that failure of Congress to act left a “regulatory hole” and that FINRA would renew its efforts to gain authority over advisers if it received “clear and enthusiastic backing” from the SEC.

The Coalition believes that the current rate of examinations of investment advisers by the SEC (on average once every eleven years) is inadequate and must be addressed. We support authorizing the SEC to collect user fees from federally registered investment advisers to supplement the SEC’s oversight program to increase examinations to a reasonable frequency. This targeted, cost-effective and efficient solution would allow the SEC to increase examinations for all advisers to an acceptable level to better protect investors and have no impact on taxpayers or the federal deficit. A Boston Consulting Group study, commissioned by the Coalition and others, found user fees to be significantly less costly than an SRO, and to be the preferred solution by over 80 percent of investment advisers surveyed.

Last year, the Coalition worked with others to secure introduction of a user-fee bill in the House Financial Services Committee. This year, the Coalition plans to encourage Congress to continue to support user fees to close the resource gap at the SEC that is at the core of this problem.

Laying the Foundation for Recognition and Regulation of Financial Planners

More and more individuals are holding themselves out as financial planners, and the “alphabet soup” of financial planning designations continues to grow more confusing to consumers each year. To address this alarming trend, the Coalition is developing a long-term plan to address consumer confusion and protect their interests. The Coalition will take steps to educate policymakers about the importance of having set standards for competent and ethical financial planners and to lay the foundation for sensible regulation of financial planners. We will report on those plans soon.

The Financial Planning Coalition came together in 2009 with a shared vision for the financial planning profession and to be a strong and unified voice in advocating for policy reforms in financial services to protect investors. We appreciate your continued support for the work of the Coalition in the 113th Congress. For more information on the Coalition and its activities, please visit our website at www.FinancialPlanningCoalition.com.

Respectfully,