Author/s: Melissa Phipps
Issue: Feb 1, 2000

"In my conversations with them, I have concluded that Harold Evensky and Bob Goss want many of the same things I do," planner Nigel Taylor says of the chairperson and president, respectively, of the Certified Financial Planner Board of Standards in Denver. "They want to see the bar raised and more competence, ethics and professionalism in the profession of financial planning."

How that bar is raised is where the contention comes in. Taylor is known for speaking his mind when it comes to what he would like to see happen in the financial planning professionespecially when it is in opposition to the board. But we asked him to speak his mind once more, for the record.

While the CFP Board has championed practice standards, Taylor was perhaps the most vocal member of the minority opposing them. He does so to this day, saying mandatory written standards bring an increased amount of civil liability for performing the same tasks as other licensed professionals. Don't believe, however, that those opposed to practice standards are unethical people who don't want written standards cramping the style of their lying, cheating and stealing, he says.

Taylor has also been particularly vocal in his advocacy of state licensing, whereas members of the CFP Board feel that state or federal licensing with such high standards as the CFP license is impractical at this time. The board, Taylor says, is therefore opting to enforce much higher standards on CFP licensees without the benefits of a restricted profession and without a federal or state mandate to do so, while looking for ways to lower the bar to a level they feel states will accept. "I would love to get 20 politicians in a room and give them a choice of working up a financial plan with a CFP licensee, stockbroker or insurance agent and see whom they chose. It might be fun to have three plans drawn up just to see what the others might miss," he says.

"I have always subscribed to the don't ask, don't get' philosophy. The public is only served and properly protected when financial planners are regulated at the state or federal level by a government or quasi government' entity that can investigate, subpoena, punish and bar a financial planner from practice in the event of wrongdoing," Taylor says. "Consumers need to be made aware that investment' is not synonymous with financial' when it comes to advice and that financial planners need to be regulated in the business and professions code separate and distinct from the registered investment adviser statutes, because financial planning encompasses so much more."

It's pointless to have a set of teeth creating civil liability, but a situation in which the regulating body admits in writing (as he says the CFP Board did in its brochure "A Measure of Trust") that they have no real authority and can neither order planners to reimburse clients or prevent a bad licensee from dropping the mark and continuing to call himself a financial planner. "This is not their fault, and they cannot be faulted for wanting to do a good thing," he says. "I just disagree with the method."

He feels that modifying the code of ethics with the same language would be more than sufficient. Why? "Because many appeals courts have already held that higher voluntary' standards in any profession are to be encouraged, and the courts will not generally use voluntary higher standards to increase civil liability over the level of damages assessed a person licensed to perform the same tasks, but who has not agreed to follow the higher voluntary standards."

Mandatory practice standards create a different problem, he says, but by their own admission they can only be applied to CFP licensees, which creates a higher level of civil liability for licensees for the same task. "An argument could be made that the standards could be applied to anybody practicing financial planning," he says. "I am not sure if this would be true and I think the insurance and securities lobby and their lawyers would have already come out in violent opposition if it were." If it were true, he adds, these industries should be entitled to consultation before regulation.

Taylor agrees that competence, ethics and professionalism in financial planning should be promoted through attainment of the CFP mark, but disagrees in creating a quasi profession. "I'm for CFP licensees beginning a grass-roots effort to lobby the states and getting something done in the direction of providing true protection for the consumer. [Goss] and [Evensky] seem to be more for Let's create a private model and hope the state likes it enough to adopt it.'" This attitude is not necessarily wrong, he says; he just doesn't agree with it. "I think [Goss and Evensky] would support state licensing if they could get the CFP standard as a minimum. They just feel it's not realistic, from what I understand," he says.

"We share concerns about how financial planning is regulated now," Goss says of himself and Taylor. "Neither of us have felt that financial planning should be regulated as a subset of investment adviser regulation. [Taylor] would prefer state-by-state legislation. I think some of that may have some drawbacks." He adds that he has concerns about things such as lack of uniformity, limits on the practice and costs of regulation. Other practitioners worry about involving state legislatures because these bodies can become subject to lobbying efforts of other industries like banking and insurance with far more largesse to dole out to individual legislators.

"I'll always be tilting at windmills though, and who's to say what's realistic? More weird things have happened when enough people get involved," Taylor says. "What's really needed are good solid statistics that will convince legislators just how important this job is, and why regulation is needed."

COPYRIGHT 2000 Securities Data Publishing, Inc.
COPYRIGHT 2001 Gale Group

Reproduced with Permission

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Nigel B. Taylor, CFP¨ is a Registered Representative of and offers securities products & services through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered Broker-Dealer. In this regard, this communication is strictly intended for individuals residing in the states of California and Nevada. No offers may be made or accepted from any resident outside the specific state(s) referenced. Separately, Taylor & Associates is a CA Registered Investment Adviser

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