GAO: FINANCIAL PLANNERS ARE REGULATED ENOUGH
Washington, D.C. - The regulatory structure applicable to financial planners covers the great majority of their services, but the attention paid to enforcing existing regulation can vary, and certain consumer protection issues remain, according to a new report from the Government Accountability Office.
The Dodd-Frank Wall Street Reform and Consumer Protection Act mandated the GAO study. The agency reviewed federal and state statutes and regulations, analyzed complaint and enforcement activity, and interviewed federal and state government entities and organizations representing financial planners, various other arms of the financial services industry, and consumers.
The GAO noted that while the regulatory structure for planners covers most of their services, there are still some issues. First, consumers may be unclear about when a financial planner is required to serve the client's best interest, particularly when the same financial planner provides multiple services associated with different standards of care.
Second, financial planners can adopt numerous titles and designations, and consumers may not understand or be able to distinguish among them. The SEC has a review under way on financial literacy among investors and incorporating this issue into that could assist in assessing further needed changes. Finally, the extent of problems related to financial planners is not fully known because the SEC generally does not track data on complaints, examination results and enforcement activities associated with financial planners specifically, as distinct from investment advisors as a whole.
An additional layer of regulation specific to financial planners does not appear to be warranted at this time, the GAO noted. The report did suggest that the SEC assess investors' understanding of financial planners' titles and designations, and that the SEC collaborate with the states to identify methods to better understand problems associated specifically with the financial planning activities of investment advisors.
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