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Home Advocacy Federal Issues GAO Study of Financial Planning

Federal Issues

GAO Study of Financial Planning 

AICPA strongly opposes any moves to create a federal regulator for all financial planners.  CPAs are already comprehensively and appropriately regulated by State Boards of Accountancy and the IRS with regard to all financial planning activities.  An additional layer of regulation would be redundant and unnecessary.

A provision authorizing a study by the General Accountability Office of the possible need for a financial planning regulatory agency is included in the "Dodd-Frank Wall Street Reform and Consumer Protection Act," as enacted on July 21, 2010.

Background

The CFP Board, Financial Planning Association and the National Association of Personal Financial Advisors have organized as the Financial Planning Coalition with the objective of having financial planning services subject to comprehensive federal regulation and having financial planning recognized as a legitimate and accepted profession.  Their stated goal is to subject everyone who offers “financial planning advice” (broadly defined to include those who, among other things, offer financial planning, tax planning and investment advice) to a fiduciary standard and regulation by an SRO.

Barry Melancon has met with Kevin Keller, CEO of the CFP Board, and AICPA staff has met with staff from each of the three organizations on these issues.

Legislative Action

As part of the House Financial Services Committee’s consideration of bills to make changes to the financial regulatory framework, the Committee marked up the “Investor Protection Act of 2009,” H.R. 3817.  The Financial Planning Coalition met with Congressman Michael Capuano, a Massachusetts Democrat, regarding a potential amendment during the committee consideration of the Investor Protection Act that would create such a federal regulator.  The AICPA and a number of other interested parties also met with the Congressman during the committee meeting to express concern.  Congressman Capuano decided not to introduce his amendment.  Instead, he offered an amendment that provides for a GAO study to be conducted on the regulation and oversight of financial planning.  This provision was included in the “Wall Street Reform and Consumer Protection Act of 2009,” H.R. 4173, as passed by the House of Representatives.

The Financial Planning Coalition also met with Senator Herb Kohl, a Wisconsin Democrat, regarding a potential amendment to create a federal regulatory framework for financial planners.  As in the House, AICPA and other interested parties met with the Senator to express concern.  Senator Kohl did not introduce the amendment requested by the Financial Planning Coalition, but instead offered an amendment for a financial planning study similar to the one in the House-passed bill.  This language was included in the "Restoring American Financial Stability Act of 2010," S. 3217 as passed by the Senate.

GAO Study

The AICPA has met with the GAO on its study of financial planning to present the profession's point of view. The GAO released its study on January 24, 2011, entitled “Consumer Finance:  Regulatory Structure for Financial Planners Is Generally Comprehensive, but Consumer Protection Issues Remain."  The report summarizes the findings of the GAO’s study on the regulation of financial planning and lays forth their recommendations. The GAO essentially says that additional financial planning regulation or oversight would be duplicative. 

An excerpt of the GAO’s conclusion (from page 37 of the report) is below:

“Existing statutes and regulations appear to cover the great majority of financial planningservices,and individual financial planners nearly always fall under one or more regulatory regimes, depending on their activities. While no single law governs the broad array of activities in which financial planners may engage, given available information, it does not appear that an additional layer of regulation specific to financial planners is warranted at this time. At the same time, as we have previously reported, more robust enforcement of existing laws could strengthen consumer protection issues associated with the oversight of financial planners.”

The AICPA believes that Congress has accepted the conclusions of the report and will not act to add additional regulation on financial planners.

GAO Report

The January 24,2011 GAO report can be accessed through this link.

Copy of Legislation

A copy of the law is available on the Library of Congress's THOMAS website.  The law and all major Congressional actions leading to passage are available by using the advanced search function and searching for H.R. 4173 by bill number under the 111th Congress.  H.R. 3817 and S. 3217 are also available on THOMAS.

Staff Contact

Peter Kravitz
Director – Congressional and Political Affairs
202-434-2918
pkravitz@aicpa.org

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