"But I know our board continues to support the delivery of financial planning under an unambiguous and universal standard of care which meets the fiduciary test."
Tuttle says the average age of an FPA member is 55. "We're seeing an average of 50 to 60 members retire on a monthly basis," he says.
He says that decisions made over the next year by the SEC and Congress on the regulation of RIAs will be crucial to the FPA. "The conversations that will happen over the next six to 12 months will have an impact on us," he says.
"We think that coming up in a short bit, we will see a requirement to be a fiduciary and we want to be in a position to offer best practices to do that," he continues. "We recognize we're in this conundrum because we believe a fiduciary standard is coming. We have taken a position to get ahead of the curve for our members.
"We're just trying to remain true to our position that the [fiduciary] standard be at the level of the '40 Act."
Brown says FSI supports the fiduciary standard. "But we've also said that for there to be true harmonization, something has to be done about the woefully inadequate supervision and examination of investment advisors," Brown says.
"Reps of B-Ds are deciding to drop their B-D licenses and go RIA-only and escape the rigorous oversight-and yes, also the hassle-of FINRA and their B-D's compliance dept," Brown continues. "They're fleeing to a regulatory scheme where ongoing oversight is virtually nonexistent, and that's not good from a level-playing-field and competitiveness point of view, or good for investors. We think a fiduciary standard must be coupled with an effort to close that regulatory gap."
Brown says the best option for reform is an SRO governing RIAs, and "FINRA is the most appropriate candidate for that role."
While the SEC can enact rules to establish a new SRO for RIAs, Brown says the agency will not exercise that authority because it has been burned several times in recent years. Because of the SEC's "unfortunate record in court," Brown says the SEC is asking for explicit authority from Congress to make FINRA the new SRO for federally regulated investment advisors. "Unless Congress explicitly enacts legislation, the SEC won't give FINRA the authority," Brown says.
"The SEC is woefully underfunded and understaffed to do the job," he says, citing estimates that one-third of RIAs have never been examined. "Post-Madoff, how in the world can anyone say RIAs should be left to self-supervision?"
FSI is just one of the new membership organizations competing with the FPA for the attention of advisors. IMCA, a Washington D.C.-based group, is making a concerted push for new members and it has already been growing strongly in recent years.