FPA Proposes Legally Defining Title Of ‘Financial Planner’


The Denver-based Financial Planning Association said today that it would be pursuing a multi-year advocacy effort to pursue legal recognition of the term “financial planner” through title protection. That means, ideally, a legal definition would emerge so that anybody using the title meets certain standards that protect consumers and advance the profession.


“Right now, anybody can call themselves a financial planner, and that’s the problem,” said Patrick D. Mahoney, the FPA’s chief executive officer.


The campaign outlined by the FPA appears to suggest a push toward legally restricting who can call themselves a financial planner. However, when asked directly about this, FPA officials declined to outline specific plans.


The board said 78% of its members support such title protection for “financial planner” to distinguish those using the name from other financial service providers.


What that means legally, however, is extremely thorny, and it will likely mean advocacy at the state and federal levels through both legislation and appeals to agencies like the Securities and Exchange Commission. And if past battles over fiduciary roles are any indication, there will likely be much wrangling over the “financial planner” phrase and who can use it, especially people engaging in sales and whether those sales are the best for clients or merely suitable. Such distinctions have agonized advisors and regulators alike and led to the SEC’s Regulation Best Interest, which spells out how advisors are to demonstrate they are acting in the best interest of their clients when making securities recommendations.


Mahoney, the association’s CEO for the past two years, said in an interview with Financial Advisor that with today’s announcement, the association was merely putting a stake in the ground and that the FPA was not yet ready to discuss where and how it would wage its campaign to uphold the name.


“There’s an approach we can take federally and there’s an approach we can do  state by state,” Mahoney said. “And on behalf of our members, we’re open to either approach.” He says that the association is going to build a network of like-minded entities and build out strategies. “I don’t expect us to introduce any legislation until 2024.”


The next 12 to 18 months will be used to figure out what the competencies and standards should be, he said.


The FPA said that it was making title protection the strategic focus of its advocacy for a few reasons:


“If federal and/or state policymakers continue to leave ‘financial planner’ undefined, some will take liberties with the title, even if they are not providing financial planning services,” the FPA said in its release. “Title protection will establish minimum standards for financial planners without creating an unnecessary regulatory burden for those meeting the standards.”

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