CFP Board Advocacy Gives Voice to CFP® Professionals

It’s always a good thing when the president of the United States backs your top advocacy priority. President Joe Biden did exactly that in October 2023 when he stood in the White House State Dining Room and announced to stakeholders — including several representing CFP Board — the Department of Labor’s proposed Retirement Security Rule. The proposed rule would require financial professionals to act in their clients’ best interests when providing retirement investment advice.

The president, his staff and cabinet obviously recognize that holding advisors to a fiduciary standard — as all CFP® professionals voluntarily commit to CFP Board — is in the public interest.

CFP Board 2023 Chair Dan Moisand, CFP® and 2022 Chair Kamila Elliott, CFP® were in the audience during the announcement. Also in attendance were former Chair Blaine Aikin, CFP®, CFA®, General Counsel Leo Rydzewski, JD, CAE, and former Vice President of Public Policy Maureen Thompson.

Notwithstanding the president’s key support, it’s an uphill battle. A number of industry groups have been vocal in opposing the proposed rule.

But CFP Board has been active, too. Moisand and Elliott made the case at DOL hearings in December, and Elliott testified in support of the proposed rule in January 2024 before the Capital Markets Subcommittee of the House Financial Services Committee. 2024 Board Chair Matthew Boersen, CFP®, CFA® has been active on Capitol Hill, voicing CFP Board’s support for the DOL proposal.

The trick will be making DOL’s final rule stick. “We will continue to work on this issue in 2024 as the process plays out,” said Erin Koeppel, CFP Board Managing Director of Government Relations and Public Policy. “If the rule is adopted, that may not be the end of the story. Congress or the Courts may try to stop it.”

[NOTE: The DOL’s final rule was released on April 23, 2024. CFP Board representatives were present at the White House event announcing the final rule, and CFP Board issued a statement in support of the rule.]

ANTICIPATED TIMELINE

Some observers expect the DOL to issue the rule in the second quarter of 2024 to prevent it from being stopped either through the Congressional Review Act or by an appropriation bill that would prevent DOL from finalizing, implementing, or enforcing the rule, if promulgated.

And that’s just one vector opponents may use. Another is the legal system.

The DOL’s fiduciary standard rule was first proposed in 2010 under the Obama administration. After intense opposition, a version was finally promulgated in 2016, but was struck down by two judges on the U.S. Court of Appeals for the Fifth Circuit in 2018, on the grounds that expansion of the term “fiduciary” was not authorized under current ERISA law.

DOL has designed this latest proposed rule to satisfy the Fifth Circuit’s objections about the 2016 rule. But whereas the Trump administration didn’t defend the rule in 2018 before the court, the Biden administration will.

Making this Retirement Security Rule a reality will consume much of 2024 and may even stretch into 2025. CFP Board will be there every step of the way.

And there are other ways CFP Board is encouraging laws and regulations that democratize financial advice and protect investors:

Tax Credits: Here is one area where CFP® professionals and many others can find common ground — giving moderate-income investors a tax break on the cost of financial advice. A tax deduction was eliminated in the Tax Cuts and Jobs Act of 2017, but that provision mainly benefited the wealthy.

Things are in very early stages, but CFP Board plans to meet with other stakeholders and begin to work with Congress on a bill that would provide a tax credit for financial planning services to individuals and households that meet a certain income threshold. An effort is underway to craft language setting appropriate parameters, so the tax credit benefits the intended audience. With bipartisan concern about retirement preparedness, the climate is encouraging among congressional staff, who seem interested in the concept.

Financial Exploitation Prevention Act: Let’s face it, we’re all getting older, as are our parents and grandparents. There’s a lot of wealth ready to be passed to the next generation. Bad actors see opportunity. They know that seniors can be vulnerable to manipulation. Those who sometimes abuse positions of trust include caretakers, family, friends and unscrupulous financial advisors. CFP Board supports legislation to protect our seniors.

This is another issue where CFP Board has found common ground with groups that have different perspectives on DOL’s rule proposals.

“One of the things that CFP Board CEO Kevin Keller has always been interested in is finding those issues where we can work with industry folks we might not otherwise,” says Rydzewski. “We may not be aligned on the fiduciary rule, but there are issues where we can work together. And that’s what we want to do.”

In May 2023, CFP Board cosigned a letter to Sens. Bill Hagerty (R-TN) and Jon Tester (D-MT) expressing strong support for the Financial Exploitation Prevention Act. Other groups signing the letter included the American Securities Association, the Financial Planning Association, the Financial Services Institute, Finseca, the Investment Adviser Association, the Investment Company Institute, the Insured Retirement Institute, the National Association of Personal Financial Advisors and the Securities Industry and Financial Markets Association.

This proposed law would allow a registered investment company or transfer agent to delay redemption of a security if it reasonably believes such redemption was requested through the exploitation of a security holder who is a senior or unable to protect their interests. The bill passed the House unanimously and is awaiting action in the Senate.

529 Plans: CFP Board believes CFP® professionals and those considering joining their ranks should be able to use 529 plan funds — currently allowed only toward the cost of education — to pursue CFP® certification or maintain the credential. This will benefit investors as well as financial professionals because it could bring more advisors into the field. CFP Board is an active member of a coalition led by the American Society of Association Executives pushing the “Freedom to Invest in Tomorrow’s Workforce Act.”

These actions further one of the strategic priorities set by the Board of Directors for 2022-26: that of workforce development and expanding the talent pipeline to meet the growing public demand for competent and ethical financial planners. The bill would expand 529 plan uses to include many kinds of professional credentials, not just in the financial space. Support is growing, but to have a chance at passage, the bill likely needs to be part of a larger package. And little is happening in Congress right now.

A NEW WORLD

Looking forward, the decision to create an organization under Section 501(c)(6) of the tax code will pay dividends for the financial planning profession and CFP® professionals on the policy front. Before 2023, CFP Board existed only as a 501(c)(3) — meaning CFP Board could only take positions for the public benefit. Actions to benefit the financial planning profession and CFP® professionals themselves were a different matter, even though in many cases there was a mutual benefit for consumers.

Now, the 501(c)(6) organization, called CFP Board of Standards, can advocate for things like 529 plan flexibility and tax credits for financial advice. (CFP Board Center for Financial Planning is the 501(c)(3) organization, with a mission to advance competent and ethical financial planning and expand CFP® professional diversity for the benefit of the public.)

“That opens up a new world,” says Rydzewski. “CFP Board of Standards will have more opportunities to engage in advocacy that benefits the professional.”