NAIFA Issues GovAlert to Oppose Kohl Amendment to Over Regulate “Financial Planning”

In a March 11, 2010 GovAlert, NAIFA urged members to oppose an effort by Senator Herb Kohl (D-WI) to establish “financial planning” as a profession subject to new regulations by a new Self Regulatory Organization (SRO).  The GovAlert, which was sent to NAIFA members who are constituents of Senators who serve on the Senate Banking Committee, urges the Senators to reject the Kohl amendment which is set to be offered when the Banking Committee takes up its massive financial services regulatory reform bill the week of March 22. 

NAIFA President Tom Currey CLU, ChFC, LUTCF issued the following statement in response to the Kohl effort:

We oppose the Kohl amendment because it does not just seek to simply regulate currently unregulated individuals who call themselves “financial planners”. Rather, it would establish a new SRO for “financial planners” and effectively impose another layer of regulation on many NAIFA members who are already regulated at multiple levels: namely by state insurance commissioners, state securities regulators, FINRA and the SEC depending on which licenses and registrations they hold.  We think the Kohl proposal is a harmful and unnecessary step for these currently-regulated individuals. Moreover, this proposal would result in a huge change in the current approach to regulatory oversight and has never been the subject of any hearing or comprehensive analysis to determine either its necessity or its impact on the marketplace. For these reasons we believe this issue would best be addressed in the context of the comprehensive study of the current regulatory environment that has been championed by Senators Johnson and Crapo. Because the Johnson/Crapo approach study result in the requirement that the SEC act to address gaps in regulation that are found, it seems appropriate to address this issue in the right order and not put the cart before the horse.

According to a November 3, 2009 letter by the Financial Planning Coalition to the leadership of the House Financial Services Committee, we think they should agree with our concerns. In the letter they urged the Committee to reject an amendment by Rep. Spencer Bachus that would have placed investment advisers under the regulatory supervision of FINRA. According to the letter, “The expansion of FINRA’s authority under Bachus 001 is without precedent and the impact of this new oversight structure is significant…We believe this issue warrants greater deliberation and we strongly urge you to conduct a more thorough examination before allowing the delegation of substantial authority from the Securities and Exchange Commission (SEC) to a self-regulatory organization (SRO) that has no experience overseeing advisers or enforcing the provisions of the Investment Advisers Act of 1940.”

NAIFA members who have not responded to the GovAlert are urged to do so by clicking here.

NAIFA Staff Contact: Jill Edwards, Assistant Vice President – Federal Government Relations, at (703) 770-8158.