When Richard Salmen began serving as president of the Financial Planning Association on January 1, 2009, he came in at a critical time. Stocks were falling, and by February 23 had fallen nearly 50% from their peak levels in October of last year, the Dow cruising below 7,115 points by that time.

Meanwhile, the new administration of President Barack Obama was promising to fix the U.S. financial system with a series of reforms that had the advisor community wondering where they would stand, especially when the Securities and Exchange Commission came under the leadership of former FINRA chief executive Mary Schapiro.

FINRA is the largest self-regulatory organization, or SRO, under the Securities Exchange Act of 1934 (the successor to the National Association of Securities Dealers). The regulatory body writes and enforces rules governing the securities industry as well as enforcing federal securities laws. FINRA also has jurisdiction over all broker-dealers and registered representatives, and has the authority to discipline firms and individuals who violate the rules. Advice-givers have been curious about whether Schapiro's background with FINRA would lead to that body eventually overseeing financial advisors as well.

On February 19, Schapiro met with Salmen, as well as FPA CEO Marv Tuttle and government relations director Duane Thompson. According to Salmen, Schapiro said she planned to bring "a fresh set of eyes" to her new role as SEC chair. From that, Salmen says, he drew this conclusion: "We shouldn't read too much into where she came from, or [conclude] that when she was appointed there was any agenda to make FINRA the SRO for investment advisors."

Salmen recently spoke with Financial Advisor about the challenges and opportunities he sees for advisors under the new administration and newly elected Congress. Besides his new role as FPA president, he's also a senior vice president/senior advisor with Gtrust Financial Partners in Overland Park, Kan., as well as a veteran of Waddell & Reed, Financial Planning Concepts and Legacy Trust Company. (He's also authorized to represent taxpayers before the Internal Revenue Service, and furthermore he's a certified toastmaster with Toastmasters International and a licensed pilot.)

FA: Can you clarify for our readers which advisors are not under FINRA's supervision?

RS: Registered investment advisors are regulated by the SEC directly if they have $25 million in assets under management or more. Less than that and they're regulated by the securities departments of the individual states. FINRA regulates broker-dealers and their brokerage activities.

FA: What would be the point of the SEC imposing an SRO on all advisors, then?

RS: Some of it has to do with the climate for potential change in Washington.

Always in a crisis there's a push to do something, and FINRA has been lobbying for this job for some time. Whereas I think FINRA would like to have the job of regulating RIAs, the difference is RIAs are held to a fiduciary or "[do what's in the] best interests of the client" standard, while for brokers under FINRA the question is whether the product is "suitable" for the client. The fiduciary standard could get watered down if there was a FINRA-run SRO, and might be lowered to a suitability standard. The advisor community doesn't want that to happen.

FA: What do you think will actually happen, then?

RS: I think the first issues Rep. Barney Frank [chairman of the House Financial Services Committee] will deal with are more systematic-type risk issues he'll be looking at over the next two to three months. We're talking about solvency of the banking system-some very macro things. What we're hearing is once that's done, he might get into the retail advice side of things.

FA: You'd mentioned there is also some real advisor interest in recent comments by SEC Commissioner Luis Aguilar about more encompassing fiduciary standards that could be forthcoming in the not-too-distant future.

RS: The commissioner has come out strongly in favor of a fiduciary standard that would apply to everyone providing financial advice. He seems to be an ally of the RIA community and the FPA. Again, under a fiduciary standard you are required to do what is in the best interests of the client. If a certain type of bond in a broker's inventory is considered "suitable" for a client, now it's OK for the broker to sell that bond even if there are better ones out there. It's a bit of a fuzzy line. The advisor community considers Aguilar to be a champion of fiduciaries.

FA: In an address to the North American Securities Administrators Association's Winter Enforcement Conference in San Diego just after New Year's, for instance, he said the regulation of broker-dealers who provide investment advisory services is "one area to watch closely," adding that: "Historically, broker-dealers that simply effected transactions as directed by their clients generally would not be fiduciaries," but that, "As broker-dealers increasingly provide advice to their clients, the higher standards and fiduciary duties of advisors should also be applied to these broker-dealers." Does the FPA agree? Do you?

RS: Yes.

FA: I'm just curious also as to whether you think the issues surrounding FINRA and the possibility of an SRO for advisors down the line is something that has even hit President Obama's radar?

RS: Based on our meeting with Chair Schapiro, I really don't think so. When we spoke with her, we also made clear we believe in a fiduciary standard for advice. We don't think FINRA has the people or mechanism in place to regulate for a fiduciary standard. We think the best body to regulate RIAs is the SEC under the 1940 act that created the SEC. That law was born out of the Great Depression.

FA: Is the country in a depression now?

RS: No. We're in a severe recession. During the Great Depression, unemployment got to over 25%. We were at 7.6% in January.

FA: What has been the experience of fee-based or fee-only planners like yourself in light of the massive declines we've witnessed on Wall Street-how are they faring at a time when their clients are seeing 30% or even 40% of their life savings evaporate? Given that revenues have been seriously gutted, do you think some will leave the business?

Also, how is this impacting fee-based planners from an emotional and financial perspective?

RS: In my 18 years in this business, this is the most challenging time I've experienced, but it offers a real opportunity to have real conversations with clients.

We have had some really unbelievable meetings addressing what's really important to them, and what is under their control to deal with.

The bottom line is that this thing will turn around. It's been the most unexpected drop I think the profession has ever seen in terms of the magnitude of all the problems that came up and how everything was tied together, beginning with Lehman going bankrupt.

The government didn't allow Bear Stearns to fail but did allow Lehman Brothers to. In hindsight, I think they wouldn't do that again. It froze up the credit markets, and money flows just shut down. As a result of everything that's happened, however, clients were forced to look not just at their portfolios but their lives.

Good financial planning helps people use money more effectively in their lives in order to achieve their life goals. It involves handling their income, their debt, and how much they're enjoying their money. It means balancing living for today versus planning for tomorrow. The thing is, we've helped people to focus on financial planning beyond money management. I talked with Chair Schapiro about this very thing. As members of the advice community, this is what we should be doing now and going forward. Looking for opportunities to build business during times of uncertainty when people are really looking for advice. Meanwhile, one of the things FPA has created is our crisis resource center to help members deal with the double whammy of more work and revenues dropping 20% to 40%, which is adding to the stress of dealing with this financial crisis.

FA: This is what I've been hearing: Planners are seeing revenues dwindle but they're also seeing more interest in what they do and bringing in more new clients than usual. Has that been your experience at Gtrust?

RS: We're definitely getting more inquiries, but we're so busy we can't take in a lot of new clients at one time. This is a mature practice with four offices in Kansas and about 27 employees.

FA: I take it most advisors are not running for the exits and leaving the business due to the current pressures.

RS: No. For the most part, advisors want to be there for their clients. On the other hand, there will be some advisors who are retiring.

FA: This is also an issue for the advisor community right now, correct? That of advice-givers' ages as the practice itself matures?

RS: Yes, it's an issue. At the FPA, our average age is 53 or 54. There needs to be another generation of advisors that comes in. But this is a very vibrant community from an education perspective. There are several universities with Ph.D. programs in financial planning, for instance, including Texas Tech and Kansas State University.

Janet Aschkenasy is a freelance writer living in New York City. She wrote Financial Advisor's December 2008 story, "Who Discloses What?" about proposed fee disclosure rules for plan sponsors and advisors.