Denver (Dec. 30, 2003) -- Clients aren’t the only ones whose confidence in the securities markets has been shaken by the spate of corporate governance, accounting and mutual fund scandals -- some financial planners have the jitters as well, according to a survey of Certified Financial Planner professionals by the CFP Board.

When asked how much the past three years’ corporate governance scandals, accounting irregularities and mutual fund trading accusations have affected their own confidence in the securities markets, 54 percent of the 418 CFP respondents said they were somewhat less confident, and another 7.9 percent were much less confident. Almost 32 percent had no change in confidence, while 5.5 percent said they were somewhat more confident, and 1 percent were much more confident.

Two-thirds of planners (66.5 percent) said clients were somewhat less confident, while 22 percent said they were much less confident, and 10.3 percent said they saw no change in confidence. Seven percent said clients were somewhat more confident, while 0.5 percent said clients were much more confident.

Among eight proposed reforms for restoring investor confidence, planners showed the greatest support for enforcing the 4 p.m. deadline for mutual fund orders -- cited by 87.3 percent of planners as extremely or significantly important. Proposals for increased disclosure and inspection requirements for hedge funds ranked second, at 73.1 percent; followed by a proposal to make it easier for funds to enforce rules with brokers who use omnibus mutual fund accounts (72.1 percent); and a requirement that the chairman and 75 percent of the members of mutual fund board be totally independent of the fund company (61.6 percent).

Almost 60 percent (59.6 percent) cited as extremely or significantly important a proposal to require greater and simpler disclosure of funds' brokerage commissions and expenses, including details on soft-dollar deals and financial incentives.

Fewer planners showed strong support for requiring funds to have a compliance officer who reports directly to the fund's board of directors (cited by 50.8 percent as extremely or significantly important), placing mandatory fees on short-term mutual fund trades (45.7 percent), or creating a new, private mutual fund oversight board (18.7 percent).

-- WebCPA staff

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