by Melissa Klein

Atlanta - As it sharpens its focus on financial-planning-specific issues, the Financial Planning Association has announced that it is moving away from serving its broker/dealer members and is helping that constituency to form its own association.

The decision to form a separate organization came last month, when the FPA’s board of directors, along with its Broker/Dealer Advisory Council, agreed that the FPA can no longer meet the increasing needs of its more than 100 broker/dealer members. Leaders of the FPA and the advisory council say that the split is amicable.

“Our advocacy efforts are focused on financial planning and the needs of [Certified Financial Planners]. Broker/dealers have growing needs because of the landslide of new regulations,” said FPA president David Yeske. “They need representation in Washington and at the state level. Over the last year, it became painfully obvious that their needs are not being met. Our conclusion was that the FPA wasn’t going to be able to provide the advocacy the broker/dealers are looking for.”

The group’s broker/dealer members came into the FPA through one of its predecessor groups, the International Association for Financial Planning. When the IAFP merged with the Institute of Certified Financial Planners in 2000 to form the FPA, Yeske said, the new association decided to focus only on financial planning.

“The board, in refining its clarity about the FPA’s purpose - to be for and about financial planning - realized that it really didn’t make sense to have the existing broker/dealer programs in house,” said Yeske. “This decision is the result of a strong desire to take care of our broker/dealer members and get them what they need.”

A spinoff is expected to be complete by the end of 2004.

Until then, the FPA is providing both financial and staffing support to the steering committee that will develop the new association. Yeske said that the FPA will continue to run planned broker/dealer programs, such as the annual broker/dealer conference scheduled for January 2004, until they can be transitioned to the new group.

Yeske admitted that the move will have a negative financial impact on the FPA. Based on revenue generated from dues and the broker/dealer conferences, excluding unallocated staff resources, he said that the loss in gross net revenue will be somewhere around $400,000 to $500,000.

“The FPA still wants to have a relationship with independent contractor broker/dealers,” said Yeske. “We believe there’s some good financial planning taking place in that environment.” He noted that broker/dealers may remain part of the FPA as institutional members, and reps who are already individual members are not impacted by the change.

“This is a positive development in the eyes of the Broker/Dealer Advisory Council and the FPA board,” said Tony Batman, chairman of the 12-member advisory council and president of Dallas-based 1st Global. Batman is also the chair of the steering committee that is developing the new group. “We will always have a strong alliance with the FPA because of our shared financial-planning-centricity.”

Batman said that his firm, 1st Global, which has been a broker/dealer member of the FPA and its predecessor since 1992, will remain an institutional member of the FPA.

“The broker/dealer members of the FPA have needs that cannot be honored, because they aren’t necessarily financial-planning-centric,” Batman said. “Since Sept. 11, and exacerbated by major Wall Street failures like Enron and accounting failures like Arthur Andersen, securities regulators and the federal government have rapidly introduced sweeping changes to the securities industry. The advisory council determined that we need highly energized advocacy services to help us navigate this rapidly changing environment. The FPA could not do it by its own admission.”

Those changes, in the form of the Patriot Act and Sarbanes- Oxley, have created myriad operational and compliance issues for broker/dealers, Batman said.

When it meets this month, Batman said that the steering committee, compromised of the 12 members of the FPA Broker/Dealer Advisory Council and a half-dozen other broker/dealer executives, will also discuss the possibility of aligning with an existing professional association. Groups under consideration include the Securities Industry Association, the National Association of Independent Broker/Dealers, and the Investment Management Consultants Association.

Batman said that the decision whether to align with an existing group or start a new one will be made by the end of the year.

He added that the primary objective of the new association would be regulatory and legislative advocacy for independent contractor broker/dealers, including advocacy involving Securities and Exchange Comission-registered investment advisor matters and state insurance regulation matters. The needs of independent contractor broker/dealers differ from those of the large wirehouses, like Merrill Lynch, because their reps are not employees.

With 90,000 registered reps, Batman noted that independent contractor broker/dealers represent the largest group of registered reps within the securities industry.

Roger Ochs, president of Irving, Texas-based H.D. Vest, a broker/dealer member of the FPA, said that he’s in support of the move. “Separating ourselves gives us more focus on issues that pertain to us. I think the FPA going in that direction is a good idea,” he said.

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