Jeffrey Massey, a certified financial planner who is also certified in long-term care planning, is the founder of Massey & Associates and Ameri-Tax Wealth Advisory Group.

Also a member of the Financial Planning Association of Rhode Island, Massey has more than 20 years experience in the financial advising business. He answered five questions about a national legislative effort by the Financial Planning Association to improve consumer protections in the financial sector.

PBN: Can you briefly outline the legislation your national industry group, the Financial Planning Association (FPA), is pushing for in Congress?

MASSEY: The Financial Planning Association is lobbying Congress to implement safeguards for the financial services industry. The legislation being requested is to protect the public at large against inappropriate financial recommendations that are made without a fiduciary level of care.

In essence, anyone licensed to sell financial products can call themselves a financial adviser with virtually no oversight as it relates to a fiduciary level of care. That is the main point with this legislation.

PBN: Why is this needed?

MASSEY: Unfortunately, there are too many so-called financial advisers in the field that make recommendations based more on how much they will make in commissions on the sale instead of the appropriateness of the recommendations as it relates to a well-thought-out, all-encompassing financial plan. All too often, these recommendations leave the client in a position that is less than ideal. Some common problem areas are too much risk within their portfolio, or not having enough liquidity should an emergency arise.

PBN: In your experience, do consumers have an understanding of the relationship between them and their financial advisers? And which ones have a fiduciary relationship with the clients?

MASSEY: Since there are so many different “titles” when is comes to financial services, it is very difficult for a consumer to differentiate between the myriad titles that we all see in this business. The Financial Planning Association along with the Certified Financial Planners Board of Standards Inc. and the National Association of Personal Advisors are all lobbying to see that these standards of care are elevated to the level of a fiduciary relationship between the consumer and the planner.

As an example, Registered Investment Advisors and Certified Financial Planners are required to put the concerns of the client before their own. Broker dealers, stock brokers, etc., [are not required to] operate under this same level of care. Their level of care is at the “suitability” level. A particular investment may be “suitable,” but something else may have been better for the client.

Additionally, the industry has created titles that imply that someone has particular credentials when, in fact, they don’t. As an example, a “certified senior adviser” title has been misused by too many advisers to imply that they have credentials relating to the financial industry. This title is a non-financial designation and a few states have moved to disallow the use of that title on a business card relating to financial services. Many insurance companies have also put this title, along with many others, on their “do not use” list of titles.

PBN: Where does the CFA proposal stand right now? What are the chances of it becoming law, particularly in light of the steps the Obama administration is taking to heighten consumer protections in the financial sector?

MASSEY: There is still a lot of lobbying that must be done to bring this type of sweeping regulatory change to fruition. I personally believe that the efforts of the White House administration to better regulate the financial services industry will make this type of legislation more palatable to the politicians. There is an overwhelming need to better regulate our industry. In my opinion, the protective measures that the White House wants implemented are basically targeted at the higher levels. The Financial Coalition is fighting for the grassroots type of protections so I do think that the legislation will eventually come into being.

PBN: Has there been opposition?

MASSEY: As you can imagine, we’re talking about which entity would be best to regulate the financial planning industry. In essence, it’s a turf war. FINRA (Financial Regulatory Authority) has been vying to get the nod from the Securities and Exchange Commission to be “the” regulatory organization of the financial planning industry. In the past FINRA has been very outspoken against raising the level of care to that of being a fiduciary. So, I find it ironic that they now want to be the regulators of that level of care.

The Financial Planning Coalition, made up of the CFP Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Planners, in my opinion, are better suited to oversee the industry under the fiduciary level of care as they have been doing just that for many years. Additionally, FINRA has been focused more on transactions, not financial-planning issues.