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.