The FPA proposes a title legally defining the “financial planner”


The Denver-based Financial Planning Association said today it will continue a multi-year advocacy effort to gain legal recognition for the term “financial planner” through title protection. This means, ideally, that a legal definition would emerge so that anyone using the title meets certain standards that protect consumers and advance the profession.

“Right now anyone can call themselves a financial planner, and that’s the problem,” said Patrick D. Mahoney, chief executive of the FPA.

The campaign described by the FPA seems to suggest a push towards legal restriction of who can call themselves a financial planner. However, when asked directly about it, FPA officials declined to outline any specific plans.

The council said 78% of its members support such protection of the title “financial planner” to distinguish those who use the name from other financial service providers.

What that means legally, however, is extremely tricky, and it will likely mean state and federal advocacy through legislation and appeals to agencies like the Securities and Exchange Commission. And if past battles over fiduciary roles are any indication, there’s likely to be a lot of wrangling over the term “financial planner” and who can use it, especially people who engage in sales and whether those sales are best for customers or just appropriate. Such distinctions have anguished advisers and regulators and led to the SEC’s Best Interest rule, which outlines how advisers must demonstrate they are acting in the best interests of their clients when making securities recommendations. .

Mahoney, CEO of the association for two years, said in an interview with Financial Advisor that with today’s announcement, the association was simply putting a stake in the ground and that the FPA was not yet ready to discuss where and how it would campaign to defend the name.

“There’s an approach we can take federally and an approach we can take state by state,” Mahoney said. “And on behalf of our members, we are open to either approach.” He says the association will build a network of like-minded entities and develop strategies. “I don’t expect us to introduce legislation until 2024.”

The next 12 to 18 months will be used to determine what the skills and standards should be, he said.

The FPA said it is making title protection the strategic focus of its advocacy for several reasons:

“If federal and/or state policymakers continue to leave ‘financial planner’ undefined, some will take liberties with the title, even if they do not provide financial planning services,” the FPA said in its statement. “Title protection will set minimum standards for financial planners without creating unnecessary regulatory burden for those who meet the standards.”


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