A proper regulatory structure is one in which practitioners show they

1.     know the right things,

2.     do the right things and

3.     are accountable if they fail to meet their obligations.

As it is currently, the SEC long ago stated through IA-1092 that holding out as a “financial planner” triggers the need to register as an investment advisor representative. This declaration did not make much of a splash probably because planning wasn’t as popular when it was released and it was released in October of 1987, shortly before the significant distraction of that month’s crash.

This declaration is good and proper but far from enough. Registering brings fiduciary duty to the party but only with respect to matters of investment advice. If you don’t want to be subject to the fiduciary duties that come with registration it is easily avoidable. Just don’t use the title “financial planner” or say you offer “financial planning.” Say instead you will “help with your financial plan” and call yourself a financial advisor (not “investment advisor”) or something similar, as an official title.

Doing this you could be selling a wide variety of products based on suitability or caveat emptor. In fact, oddly enough, you can even slap “CERTIFIED FINANCIAL PLANNER professional” on your card and letterhead and not be deemed to be holding out.

That is not a dig at the CFP Board. CFP Board’s process is a darn good model for meeting requirements number one and two from above. That is not the case with regulators. Even if you hold out as a planner and are registered for investment advice, there is no requirements about how you do planning or even that you do any planning at all.

With CFP Board, this massive void is filled. Regardless of how a person is registered or licensed or not, to use the marks they need to prove they know something significant about financial planning.

Further, through its rules and practice standards, CFP Board also requires certificants to maintain their knowledge and meet expectations relating to how practitioners put their knowledge to work.