Financial Planning Coalition
About the Coalition
The Financial Planning Coalition is a collaboration of
- Certified Financial Planner Board of Standards, Inc. (CFP Board);
- Financial Planning Association® (FPA®); and
- National Association of Personal Financial Advisors (NAPFA).
The Coalition represents the development and advancement of the financial planning profession. Together, we advocate for policy measures that ensure financial advice is delivered in the best interests of the public. We also enable the public to identify ethical and competent financial planners. And we educate policymakers about the financial planning profession.
The mission of the Financial Planning Coalition is to develop and advance the financial planning profession for the benefit of the public. The Financial Planning Coalition serves as the leading voice regarding recognition and regulation of the profession.
The Financial Planning Coalition's vision for the financial planning profession includes the following elements:
- The public views and values financial planning as an established and recognized profession.
- A code of professional conduct that (i) includes a robust fiduciary standard that requires the delivery of financial advice in the best interest of clients and (ii) is based on CFP Board's Code of Ethics and Standards of Conduct.
- Regulatory standards based on CFP Board's Code of Ethics and Standards of Conduct.
- A Body of Knowledge based on research and practice.
- An established career path that includes education, a competency exam and professional experience.
- Support for and promotion of pro bono financial planning services.
- The diversity of the American population is reflected in the profession.
- A vibrant community that supports and develops financial planning professionals.
The Financial Planning Coalition represents the development and advancement of the financial planning profession...and serves as the leading voice regarding recognition and regulation of the profession.
Fiduciary Duty. The Financial Planning Coalition has long supported a uniform, nationwide fiduciary standard of care for personalized investment advice. Our position is based on the real-world business experience of CFP® professionals who are stakeholders and members of the Coalition organizations. These CERTIFIED FINANCIAL PLANNERTM professionals provide fiduciary-level services across business models – as investment advisers, broker-dealers, and insurance agents – and across compensation models – including commission and fee models.
It is against this backdrop that the Financial Planning Coalition has commented on various developments affecting the fiduciary standard of care, including:
- the Securities and Exchange Commission's Regulation Best Interest rule package proposal;
- Nevada Securities Division's draft regulations regarding the state-level fiduciary standard of care;
- the New Jersey Bureau of Securities' pre-proposal to adopt a fiduciary standard; and
- the New York Department of Financial Services' proposed amendments regarding suitability and best interests in life insurance and annuity transactions.
Disclosure Testing. The Financial Planning Coalition recognizes that clear and understandable disclosure is critical to informed investor decision-making. Yet research conducted on behalf of the SEC, the Coalition, and others has shown how difficult it is to convey even the most basic concepts in a way that investors understand. There is a difference between what retail investors “like” and what they “understand.” It is not enough to simply survey retail investors about what they like about a proposed disclosure document to determine it would effectively achieve its regulatory purpose. That is why we support qualitative testing in the form of cognitive interviews of retail investors before disclosures are finalized.
The Coalition's position stems from the qualitative investor testing it commissioned, alongside investor advocacy groups, regarding the SEC's proposed Form CRS. The neutral, third-party testing expert found that, "While investors like the idea of a brief disclosure document for broker-dealers and investment advisers, the disclosures as currently conceived do not achieve the intended result [of informed decision-making]." More specifically, the struggle to grasp the meaning of Form CRS disclosures led "not just to a lack of understanding, but to a misunderstanding of the information presented." This lack of understanding also was reflected in the SEC's own research based on in-depth interviews.
Based on the Coalition's experience with retail investor testing, we strongly support H.R. 1815, the SEC Disclosure Effectiveness Testing Act, introduced in the 116th Congress. The legislation would require the SEC to conduct investor usability testing when developing disclosures that are used and relied upon primarily by retail investors. Importantly, H.R. 1815 would require the SEC to undertake qualitative testing in the form of one-on-one cognitive interviews of retail investors, which is essential to determining whether proposed disclosures effectively convey the desired information.
Private Certification. The Financial Planning Coalition believes in the value that private certification brings to the marketplace. Our member organizations are educating lawmakers about the benefit of private certification in response to emerging state-level bills targeting occupational licensing reform. Although these bills may not intend to undermine private certification, some could have unintended consequences for voluntary certifications administered by private certifying bodies, such as CFP Board. Therefore, the Financial Planning Coalition believes that draft legislative language must reflect the importance of professional certification offered by private entities.
The CFP® certification requires completing a formal higher education program, passing a comprehensive exam, earning substantive experience, and agreeing to put the client's interests above the CFP® professional's own interests. The CFP® certification is supported by a robust enforcement function. Any state-level occupational licensing reform bill that falls short of recognizing the significance of such rigorous private certification will result in less consumer protection.