This year, financial advisors saw some of the biggest changes in the evolution of their industry since the financial crisis. There hasn’t been a flurry of regulatory changes like this since the two-year period from 2007 to 2009. Those years saw the Financial Planning Association successfully challenge the Securities and Exchange Commission and its exemptions for broker-dealers. They also saw the introduction of fiduciary duties, in some circumstances, to the CFP Board’s rules and the passage of the Dodd-Frank Act.

I believe financial planning is a profession (in the noblest sense of that word), and so it’s appropriate that planners are held accountable to a bona fide fiduciary standard. I also believe that non-incidental investment advice is subject to the Investment Advisers Act of 1940, an idea upheld by the courts, which means those holding themselves out as “financial advisors” should be regulated solely under the auspices of that ’40 Act. They shouldn’t be able to switch hats, turning from advisors into salespeople, from fiduciaries into non-fiduciaries. It’s pretty simple. If you don’t want to be held to a fiduciary duty at all times, don’t hold out yourself out as an advisor or financial planner.

Four Changes To Watch

This year, the financial planning profession saw four significant or potentially significant events. One was the death of the Department of Labor’s fiduciary rule. Another was the unveiling of Regulation Best Interest from the SEC. The third development was that the CFP Board of Standards significantly raised the ethical bar for its certificate holders; the fourth was the reorganization of the chapter system of the Financial Planning Association.

In the years leading up to the release of the fiduciary rule by the DOL, I was hopeful that something meaningful and useful for the public would result. Alas, the public still lacks the ability to hold much of the financial services industry accountable to a bona fide fiduciary standard.

One potential significant positive that came from the whole affair with the DOL rule is that in order to kill it, its opponents had to argue—and essentially prove in court—that they are not actually trusted advisors. They have now made it explicit that they are only salespeople, and that they have only arm’s-length relationships with their clients. This tacit admission could become critical later.

Now the SEC has stepped into the fray. When I first heard that the Securities and Exchange Commission was going to take on the job of raising the standards for brokers, I was hopeful the agency might actually do its job and look out for the interests of the public above those of the financial services industry. With a title like “Regulation Best Interest,” maybe all the people holding out as “advisors” would be finally, actually subject to the Advisers Act all the time. After all, the most basic definition of a “fiduciary” is that it is someone acting in another’s best interest.

Sadly, shamefully, instead of enforcing existing law (exempting brokers from the Adviser Act only if the advice is “incidental,”) the SEC instead rebranded the “suitability” of certain products an advisor offers as the same thing as a best-interest standard. In other words, the agency used fiduciary language to describe a sales role. The rule would allow brokers to describe themselves like fiduciaries but not be held to a fiduciary standard.

The shepherd has given the wolf a sheep costume. I call this “Regulation BS” because of this horrid ruse.

If the SEC doesn’t make significant changes to the final version of this rule, I hope an organization or group will fight it in court, showing the courage the FPA did a decade ago when it sued the commission. The anti-fiduciary crowd has proved they aren’t trusted advisors, and they will have a hard time explaining how “best interest” advice is incidental and doesn’t require a relationship of trust and fiduciary duty.

Again, it isn’t complicated. Want your people to give advice? They need to be regulated as advisors and held accountable to a fiduciary standard. If you don’t want that level of responsibility, don’t tout your advice.

The CFP Board seems to be the only party with some authority that gets this right. The board announced that come October 2019 it will hold its mark-holders accountable to a fiduciary standard, not just when they are doing planning but when they are giving financial advice. The board’s definition of “financial advice” is sufficiently broad to mean that in practice, CFPs will be held accountable to a fiduciary standard at all times and there should be no hat-switching to a lower standard.

Some industry players told the board that if it went in this direction, they would pull their support for the marks. The CFP Board listened but ultimately decided to put the interests of clients first and did the right thing by applying an appropriately high standard. (The SEC, meanwhile, should be embarrassed.)

It’s nice to see the CFP Board nailing this for the profession. The board’s move solidifies beyond all doubt that the CFP marks are the marks of the profession and not just a really good indication of a person’s education or competency. Unfortunately for the public, the board only oversees its own licensees; the strongest discipline it can dole out is to revoke a person’s right to use the marks. Revocation is a big deal, but the board has only so much ability to protect consumers this way.

Another organization that has had great impact on the profession is the Financial Planning Association. The FPA was formed in 2000 with the merger of the International Association for Financial Planning (IAFP) and the Institute of Certified Financial Planners (ICFP). The merger was not without controversy.

I started on the FPA board of directors in 2003, and the differences from chapter to chapter back then were dramatic. In some areas, the ICFP chapters were stronger than the IAFP chapters. In other areas, it was the opposite or the organizations’ chapters were competing with each other in local power struggles. Some got nasty.

By the time my service ended in 2007, many chapter leaders would still identify themselves as “IA” or “IC.” At the FPA Chapter Leaders Conference in late 2007, there were still people wanting the merger to be undone. We tried to unify as best we could, but nothing got much traction.

It is only a little better today. The IA versus IC issue is largely gone now, but the influence a given chapter has on its members still varies greatly from area to area. You will find people who wouldn’t be FPA members if it weren’t for the excellence of their chapter experience and find others who say the chapters are worthless. The better-equipped the chapters are, the more members there will be making the former statement rather than the latter.

The FPA is right to work on an overhaul of its chapter system now. While I don’t think the member experience should be uniform, the chapters don’t need to be wildly different either, especially in their administration and technology. Volunteers waste a lot of time and energy on these things.

I don’t know if what the association is trying to do with its “OneFPA Network” effort—a program to transition to being one entity instead of a loose conglomeration of chapters—will work well or not. The association’s announcement about the move was a spectacularly awkward cacophony of buzzwords and consultant-speak. That rarely aids understanding or engenders trust.

The association’s leaders might not have had to scramble as much to explain and defend the initiative if they had been more straightforward in the original description. They may fare better with something like this two-sentence description in a nice piece by Karen DeMasters in Financial Advisor: “The new form for the organization will be more centralized, and administrative, and technology responsibilities will be removed from the 86 individual chapters. However, chapters will maintain their independence and continue to develop their own leaders, programs and budgets.”

Now, the quality of the original announcement shouldn’t determine the success or failure of the initiative. What will matter more are the decisions yet to be made. Dig into the material and it’s clear: The national leaders are not attempting to be dictators. They are instead leaving a lot to be decided through “participatory governance.”

Yes, the consultant-speak term “participatory governance” made me roll my eyes. But if what the FPA ends up doing is effective, it could be a nice plus for the profession. The national leaders, who I know will see this through, are strong and capable. I know of many good local leaders involved in the process too. I applaud the FPA for moving on this, and despite my criticism and skepticism, I am going to root for them and try to help. The profession and its practitioners would benefit from a stronger association, and if the local chapters are stronger, the FPA will be stronger.

So, what will 2019 hold?

Will the DOL try again? Maybe.

Will the SEC stop the name games and hat-switching and actually do its job of enforcing the “solely incidental” clause of the Advisers Act? Not a chance. It looks like Wall Street owns the commission.

Will the anti-fiduciary industry players follow through on their threats to the CFP Board to curtail support of the board’s marks now that it has a new fiduciary approach? I hope not.

Will the FPA strengthen? I hope so.

Stay tuned. 2019 is bound to be interesting.

Dan Moisand, CFP, has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager and Worth magazines. He practices in Melbourne, Fla. You can reach him at www.moisandfitzgerald.com.