Article Undercuts Its Premise
The article in May‚s issue by Andrew Gluck about software vendors needing to revise their financial planning software to accommodate new SEC restrictions on fee-based brokerage services ("New Rule Causes Software Schizophrenia"), was excellent in describing the latest hurdle for brokerage firms attempting to do financial planning while avoiding the pains of adviser regulation.
My only concern with the article is that Mr. Gluck undercuts his own premise, which is that the "new rule makes a lot of sense," because it basically allows a fee for services in lieu of a commission. Yet he then goes on to describe how "murky" the rule is since it fails to offer a clear line between financial planning and the suitability requirements of a broker offering full-service brokerage. The apparent solution to this problem is that consumers will come out the eventual winner once the consumer trade press recognizes the problems with the brokerage firms‚ limitations in advice-giving and publicizes the issue.
I only wish it were that simple. While there has been a fair amount of consumer press about the differences between advisors and brokers, what the article doesn‚t address are three key problems that the press hasn‚t picked up on. First, while the Gluck article suggests that brokerage firms are limiting the use of financial planning modules offered through software companies, it is only a matter of time before the modules get strung together to become de facto plans marketed under the rubric of "wealth management" or some other advisory term. In fact, we are hearing that it is being sanctioned over an 18-month period at one major firm. The second problem is the tactic of at least one other major firm offering "free" financial plans to clients, which hasn‚t been addressed by the SEC in its interpretive guidance; this would allow firms a free pass to do minimal financial planning and undercut the intent of the rule to place financial planning off-limits to brokers who are not also registered as investment advisors.
The third, more complicated issue left untouched by the SEC is that in the real world most financial planners aren‚t spending their days developing comprehensive financial plans, yet they would insist that they are nonetheless engaged in the practice of financial planning. This raises the touchy question of exactly which standards should someone be subject to when practicing modular financial planning, including brokers, if they are not formally drafting a plan or in a financial planning engagement, but in effect offering a full menu of financial planning services?
This issue of "comprehensive planning" versus "practicing financial planning," and what if a broker calls it something else, gets to the heart of the issue for the Financial Planning Association. It‚s why we continue to litigate a flawed rule by the SEC that makes absolutely no sense and benefits no one except the firms attempting to avoid a fiduciary standard while marketing financial planning services under a different name.

Duane Thompson, Managing Director, FPA

Washington, D.C.

Shirking Personal Responsibility
As usual, Ms. Teslik [CFP Board executive director] appears to be searching for a solution that doesn‚t involve personal responsibility or self-discipline regarding the nation‚s savings shortfall. She mentions [FA News, June 8] that no one has found a solution to the obesity epidemic; yet again she is searching for an outward solution instead of having an individual look inward and make hard decisions about his or her life.
We couldn‚t do that because it would imply that humanity has some sort of inner courage or strength of will. Looking outside the box is fine, but how about looking for ways to help parents teach their children personal responsibility, or ways to make individuals realize the repercussions of poor financial decisions. Ignoring the root of the problem by proposing goofy solutions is only a band aid; attitudes must be changed for there to be a permanent effect.
With great sarcasm I say why don‚t we let the federal government control everything for us: buy our groceries, pay our bills, decide who we marry, etc. After all, aren‚t they the best ones for the job?

Michael Anderson, JD, MS, CFP
Vice President, Evensky & Katz
Coral Gables, Fla.