Adviser issues lack Madoff moment
March 7, 2013 by Mark Schoeff Jr.
Earlier this week, the House Financial Services Committee released its hearing schedule for the first part of March. It is replete with sessions revolving around housing, monetary policy and “too big to fail.”
The roster underscores that adviser issues are buried under higher-profile or more urgent topics. What the adviser area lacks is “Madoff moment” that would catalyze congressional activity on investor protection.
It’s a good thing, of course, that we haven’t had a major client ripoff recently of the magnitude of the Ponzi schemes perpetrated by Bernard Madoff or R. Allen Stanford. But it usually takes a crisis to focus the attention of lawmakers.
This situation creates a challenge for adviser advocates on Capitol Hill. What do you do when no one is paying attention?
“When there isn’t an immediate crisis or scandal, it remains important for organizations like ours to keep the issues of investor protection front-and-center before members of Congress and to continue to seek reforms in these areas,” said Marilyn Mohrman-Gillis, managing director of public policy and communications at the Certified Financial Planner Board of Standards Inc.
The CFP Board, the National Association of Personal Financial Advisors and the Financial Planning Association comprise the Financial Planning Coalition. It was formed in 2009, during the heart of the financial crisis, when investor protection was a priority.
Now that the issue is an afterthought, does FPC move to the sideline? Not exactly. It just plays a more subtle game.
“We can’t step back just because it’s not a top-of-mind issue,” said Karen Nystrom, NAPFA manager of public policy and advocacy. “It’s our job to keep it top-of –mind. While there is nothing immediate [happening] and we have time, it’s a good time to get [lawmakers] up to speed. It’s a great time for education.”
That is the tack that the Investment Adviser Association took this week. Ten members of the group’s board of governors conducted 18 Capitol Hill meetings with lawmakers and their staffs on Tuesday, according to Neil Simon, IAA vice president for government relations.
Sitting down without the agenda revolving around a piece of legislation offers some advantages.
“Often times, the conversation can be more wide ranging and in-depth,” Mr. Simon said.
For instance, the IAA representatives talked about the regulation of their profession – an obscure topic for many members of Congress.
“We stressed the importance of maintaining SEC primacy in this area – and steps that can be taken to strengthen its oversight,” Mr. Simon said.
The advisers made the same point that SEC leaders do about the agency’s budget – that it is funded by fees collected from financial market participants rather than tax dollars.
Just before the State of the Union address last month, the FPC issued a statement calling for “the enhancement of the [SEC’s] existing oversight program.”
Generating support for that idea in a House dominated by Republicans skeptical of the SEC’s efficacy will require a lot of educational sit-downs with lawmakers
