"One of the messages that we took to all three regulators is that while we appreciate the importance of their jobs, we think it's important for them to understand that what they regulate is often a tiny slice of what our members do," says FPA President David Yeske, who attended the meetings with FPA Executive Director Janet McCallen and Director of Government Relations Duane Thompson.

Yeske admits that while regulators seemed receptive, some also used his words against him, asking whether the industry needs more oversight if only "a tiny slice" of planners' work is regulated. That was not exactly the reaction the FPA hoped for. Some advisors believe that regulation is focused heavily on transactions, when they do so much more, says Yeske.

Less than two weeks later and without warning, the SEC announced it was considering recommendations "on ways to involve the private sector in fostering compliance by investment advisors with the federal securities law."

To most eyes, "involve the private sector" means one thing: The SEC wants to appoint an SRO as the first-line regulator for advisors, and worse, it may well be the existing cop on the sales regulation front, the National Association of Securities Dealers (NASD). Because the NASD has suffered more than its share of internal scandals and the majority of its members compete against advisors, many in the profession view them as an unwelcome interloper.

The new flap is the latest incident in a saga that started late last summer, when the SEC's Pitt allegedly admonished NASD Chairman and CEO Robert Glauber for not taking over retail investment advisor regulation. The FPA publicly rebuffed the notion that they would lightly accept NASD regulation in a letter to Pitt, who seemed to deny the allegation. Glauber, too, denied the allegation that he had any interest in becoming advisors' new SRO.

Flash forward to February and, in his waning days as chairman, the beleaguered Pitt manages to get the idea of creating an SRO for advisors on the SEC's public meeting agenda. Among Pitt's other alleged brainchilds: a draft proposal that all advisors be required to create written compliance policies and that firms appoint a chief compliance officer. Some regulators also asked if advisors should be required to have annual outside compliance audits and be required to obtain fidelity bonds.

"We have and would continue to oppose the appointment of NASD as a regulator," says FPA's Thompson. "Frankly, we had hoped the issue of an SRO would die with Pitt's chairmanship, and it still might."

Pitt resigned in the midst of a firestorm after several questionable judgment calls, including the failure to apprise the SEC that his appointment to lead an accounting oversight board, William Webster, recently had chaired the audit committee of a public company now under SEC investigation for accounting shenanigans.

Planning groups are hopeful that the idea for this SRO may never make it onto the agenda of Bush's nominee for SEC Chairman, William H. Donaldson. They are also hoping that as they work on their own regulatory agenda, any SRO that may be created will be within their span of control. The CFP Board of Standards' name, for instance, has been tossed around for years. Still, the next year will be a critical one for the group to decide who and what they want to be in regulators' eyes.

Despite a flurry of rule making in Pitt's waning days, several other crucial advisor rules apparently were still on the burner. Rules specifying securities custody and Form ADV II requirements for advisors have been neglected for a couple years, and there is still no timetable for their finalization.