Just a little over 10 years ago the Financial Planning Association won its lawsuit against the Securities and Exchange Commission, forcing the agency to vacate its “Merrill Lynch” rule, which excluded brokers from advisory regulations on the grounds that “advice is incidental.”

Will the FPA sue again, more than a decade later, now that the SEC is once again proposing a standard that allows brokers to offer investment advice to customers without abiding by a fiduciary standard?

“It’s a legitimate question,” FPA President Frank Paré said in an interview with Financial Advisor after he had just wrapped up FPA’s fifth annual lobbying day on Capital Hill.

Paré and 85 financial planners met with lawmakers and/or their staffers on the importance of fiduciary duty standards for all financial advisors, the loss of the tax deduction for investment advice and recognition of the financial planning process that FPA promotes.

He talked elaborated further on the issues and the day of lobbying:

FA:  What was your number one policy push in lawmaker meetings?

Paré: There was a little bit of discussion about how advisor fees are no longer tax deductible and commissions, so we discussed the unfair playing field the tax code created. But the primary push was on the fiduciary issue and having not only SEC address this, but also the importance of having consistency across the board.

FA: Did lawmakers' eyes glaze over when you mentioned the term “fiduciary”?

Paré: No, not as much as they once did. I think a lot of folks gained familiarity with a fiduciary standard because of the DOL [Department of Labor fiduciary] rule. Quite frankly, I think they were asking the right questions, now that Fifth Circuit has vacated the rule. We all discussed what the SEC is doing. Is it a fiduciary standard? Or not a fiduciary standard? Is it for transactions or throughout the relationship? Some of those questions were raised on the Hill, which was interesting because they are echoing some of the same questions we have.

FA: Do you worry that the SEC best-interest regulation for brokers is just another version of the “advice-is-incidental” exclusions from fiduciary standards that led the FPA to sue the SEC in 2006?

Paré: That’s an interesting question. Here’s the thing: At end of the day it will be interesting how things all shake out. When we look at October 2019, the CFP Board of Standards code of ethics will apply to all CFPs. The SEC, in terms of what they’re doing right now, has the opportunity to harmonize rules based on that kind of fiduciary standard. If, instead, they remove elements of the fiduciary standard from the broker rule and make it a suitability-plus standard, I don’t know how the market will respond to that.

FA: Wouldn’t that give investment advisors and CFPs a marketing advantage with investors?

Paré: It will mean that advisors and CFPs will be held to a higher standard. That’s true. Even today, we can say, if you want a fiduciary all the time when you’re seeking advice, you have to work with a fiduciary CFP. The way I’m looking at it, the SEC has an opportunity here, whether they take it or not, We will all have to wait and see. Irrespective of what the SEC does, if you’re a CFP the fiduciary standard is clear. We support that.

FA: Do you worry customer confusion might arise from the SEC’s best-interest rule and the proposed four-page disclosure document? Do you worry that these regulations put the onus on investors to figure out who they’re working with—an advisor or broker?

FPA: You hit the nail on the head. It’s great to have a marketing advantage. But is it good for investors? Consumer should not have to figure this out. Best interest sounds like, to average consumers, that they’re getting a fiduciary. But the best-interest proposal provides less, not more, protection to investors, at least in its present form. We’ll do a comment letter raising some of these points of course.

FA: Any chance you’ll sue again if the SEC creates a suitability standard that doesn’t come close to meeting the CFP Board’s code of standards in regard to a fiduciary standard?

Paré: I can’t answer that. It’s too premature. But it’s a legitimate question.

FA: Any surprises in terms of what lawmakers or staffers wanted to discuss?

FPA: Now when we go and have these conversations with legislators and staff, they welcome us. We aren’t promoting or trashing a particular product. We talk about how we emphasize the financial planning process. There are do-it-yourself tools out there for investors, it’s true. But a tool in and of itself does not make a financial plan. We are set apart from product pushers. It’s not a pejorative statement, but there is a specific process we have to follow before we get to product solutions, as opposed to those who lead with product. As a result, we were very welcome. We heard things like, 'We know about you guys because I have a couple of brothers-in-law who are CFPs.' There was a story from a staffer talking about his parents, who did not understand they’d be charged internal fees for a rollover, after the broker told them they’d only pay $40 a year.