Reuters: Regulatory News: RPT-COMPLY-Financial planning head not losing steam despite setback

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RPT-COMPLY-Financial planning head not losing steam despite setback Aug 24th 2012, 12:00 Fri Aug 24, 2012 8:00am EDT By Suzanne Barlyn Aug 23 (Reuters) - Susan John has already led the National Association of Personal Financial Advisors for a year longer than she expected because no one wanted the job in 2011. Now, she'll be at it even longer. When outspoken financial planner and lawyer Ron Rhoades became chair-elect of the group in May, John's work seemed nearly done. But that all changed quickly last week when Rhoades unexpectedly stepped aside, citing a compliance problem at the investment advisory firm he leads - a mix-up that left his firm unregistered with securities regulators in Florida. The gaffe could lead to a censure or fines. Now John, a New Hampshire-based financial planner, will have to carry on in the role that would have been filled by Rhoades. He has aggressively promoted a fiduciary standard of responsibility for securities brokers, which would require them to act in clients' best interests. NAPFA's 2,400 fee-only advisers already follow that standard. John spends two days a week on NAPFA work, including overseeing the group's lobbying agenda - which includes calls for financial planning regulation, among other issues. John sat down with Reuters reporter Suzanne Barlyn on Tuesday. Edited excerpts of the interview follow. Q: Were you surprised by Ron Rhoades's resignation? A: Surprised doesn't even begin to cover it. The right word is flabbergasted. Q: Were NAPFA members angry about his resignation? A: There were various expressions. We had a board meeting on Monday. People at the beginning were wondering why I was still running the meeting instead of Ron stepping in for first time. I had to read his letter of resignation to the board. Q: What was that like? A: There was kind of dead silence - with a few expletives. You just couldn't believe it. We're all in various stages of grief, not just for NAPFA but for the industry as a whole. Ron was a very vocal advocate of a fiduciary duty and appropriate regulations for investment advisers and financial planners. And he's pulled back from all of that at this point in time. Q: Was his resignation an overreaction to a minor compliance violation? A: Not for Ron. For someone who is as principled as Ron, we might have said, "Well, this is not really a big deal," but to him it's a really big deal. Q: Was there a bigger problem than the registration mix-up? A: That is all it was. Q: How has NAPFA's lobbying effort changed in recent years? A: In the wake of the financial crisis, we've really stepped up our efforts. We saw that maybe there was an opportunity to have appropriate regulation of financial planning as a profession and an opportunity to promote a fiduciary standard. We've always been active in commenting on various proposals in front of Congress, or about Internal Revenue Services rules or regulations by the Certified Financial Planner Board of Standards (a group that develops an accreditation program and standards for financial planners). Q: What progress has NAPFA made with its regulatory reform efforts post-Dodd-Frank financial reform law? A: There were two (government) studies done. One found deficiencies in the frequency of how often (investment advisers) are examined (by the U.S. Securities and Exchange Commission). Q: What is your view about recent legislation that would require investment advisers, who are now overseen by the SEC and states, to be examined by a self-regulatory organization? A: It's not appropriate for investment advisers. But the bill is not dead until we bury it. Another bill solves one of the problems that the SEC has - funding. They collect plenty of money, but they don't get to keep it all. The bill (would allow the SEC to) keep that money for the purpose of increasing the frequency of examinations. Q: How else can the SEC become more efficient? A: A lot of exams can be done electronically. Certainly there could be a way of doing that would protect the privacy of clients and enable the SEC to ascertain that, yes, the assets are there, which is really what the SEC's job is. Q: Are you frustrated with the slow pace of regulatory reform? A: We have so many unknowns in our world. It's hard to advise clients. We don't know what tax policy is coming. We don't know what our regulatory framework is going to be. We don't know what's going to happen with Medicare or the whole health thing. It's really frustrating. Q: What's next for NAPFA? A: The board voted to extend my term to October 31. Monday is the deadline to indicate an interest in being the chair. I'm expecting to be out of the job by October 31. Q: And if no one steps up? A: I'm going to cry a lot. Link this Share this Digg this Email Reprints

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