Certified Financial Planner Board of Standards Inc.
March 28, 2003
Jonathan G. Katz
Re: File No. S7-04-02, 2003 Conference on Federal-State Securities Regulation
Dear Mr. Katz:
I am writing to provide information to the Securities and Exchange Commission (the Commission) concerning the 2003 Conference on Federal-State Securities Regulation. CFP Board1 is pleased to provide the Commission and the North American Securities Administrators Association, Inc. (NASAA) conferees with information on the topics of investment management and investor education.
INVESTMENT MANAGEMENT ISSUES
Electronic Filing and the Investment Adviser Registration Depository (IARD)
CFP Board is pleased to be assisting in the efficient operation of IARD. As conferees know, to submit information to IARD, filers must almost always use the on-line version of Form U-4. This form now permits in Section 8, a place where filers may indicate their status for any of the five professional certifications which are exempt from the examination requirement for investment adviser representative registration, the Series 65. Included in this five is CFP Board's Certified Financial PlannerTM certification.
Since both those registering as broker-dealer registered representatives and investment adviser representatives use Form U-4, a large number of CFP® certificant filers are checking this option, whether attempting to receive a Series 65 exemption or not. There are a variety of reasons why a CFP certificant would not wish to indicate their certification status. The most common reason may be that many are registered representatives of broker-dealers whose compliance departments apply a strict ban on any non-investment adviser representative from holding out in any manner as a "financial planner." Various securities regulators have indicated to CFP Board that checking any of the five certifications is optional. CFP Board suggests conferees briefly discuss this issue to ensure all involved in this process come to the same conclusion.
For those that do indicate they are currently a CFP certificant, CFP Board is helping facilitate the automatic verification of these filers by submitting to NASD, certain fields of information from our certificant database. CFP Board looks forward to continue helping, in any way it can, the Commission, NASAA, and NASD in maintaining a useful and efficient IARD. This includes exploring automatic indication from CFP Board to the relevant securities regulators, any revocation or suspension of a broker-dealer registered representative's or an investment adviser representative's CFP certification.
Conferees may be interested to note that CFP Board, through its disciplinary policies and procedures, currently gives individuals who loose permanently or have their CFP certification revoked temporarily, 14 days to update any public information indicating their certification status. As the Form U-4 could be considered a public display of their certification status, CFP Board staff determined this policy conflicted with securities rules giving individuals 30 days to update changes to their filing. CFP Board is amending its disciplinary policies and procedures to match the time frame other securities regulators give individuals to amend the Form U-4.
Current Issues and Rulemaking Initiatives
CFP Board believes consumers of financial planning will benefit by the establishment of continuing education requirements for investment adviser representatives. As the elements change in a professional field, so should the knowledge of someone practicing in it. CFP Board believes the key question in regards to the necessity for continuing education for investment adviser representatives is, "Are the changes in this field frequent and great enough to require updating of the knowledge necessary to give investment advice?" CFP Board believes, the answer is, "Yes." This field is not static. Changes in the tax code, employee benefits trends, and the emergence of investment products such as viatical settlements, are examples of the ways in which the issues surrounding investment advice are dynamic.
CFP Board believes continuing education is the most practical and widely accepted method of promoting the proper maintenance of knowledge among investment adviser representatives. In on-going professional licensure or certification, the licensing or certifying organization must either rely on reexamination or continuing education to ensure continued competency. Considering the cost for both the organization and the individual, continuing education is most often the best answer.
CFP Board believes that professionals need to maintain the necessary knowledge required by initial certification and not necessarily be required to demonstrate growth beyond that level. For investment adviser representatives, any continuing education requirement should focus on maintaining the level of competency demonstrated by Series 65 to adequately perform their job functions.
INVESTOR EDUCATION AND ASSISTANCE ISSUES
Facts on Saving and Investing Campaign
CFP Board would like to provide any assistance it can with grassroots efforts to educate individuals about saving, investing, and avoiding financial fraud. CFP Board has worked with the Commission on its Investor Town Hall Meetings and looks forward to continuing this work. CFP Board is also eager to continue its good relationship with NASAA members and work with the organization on projects of mutual interest.
Conferees may be interested to know CFP Board supports programs, such as Financial Literacy 2010, that seek to raise the level of financial literacy among America's youth and provides educators with the resources needed to promote personal finance education in the classroom. CFP Board understands the importance of communicating this message to younger persons to equip them with the tools they need to successfully manage their personal finances and recognize the value of financial planning. To that end, CFP Board has joined forces with JumpStart Coalition for Personal Financial Literacy to help further its mission of improving the personal financial literacy skills of all young adults.
Education on Troubling Trends and "Top 10" Scams
CFP Board has recently introduced its redesigned Web site, www.CFP.net. In the first three weeks of the site being operational, more than 800 consumers have signed up to receive a consumer e-mail newsletter. CFP Board would be very interested in including consumer alerts and information from securities regulators as a part of this newsletter. This would help conferees in further spreading their messages to consumers.
Investor Education Resources
CFP Board has a history of producing and widely distributing informative investor education materials. The three most popular brochures CFP Board produces, `What You Should Know About Financial Planning,' `Ten Questions To Ask When Choosing A Financial Planner,' and `Your Rights As A Financial Planning Client' may interest conferees and can be made available to their constituents if so desired.
CFP Board hopes the information it provided is useful to conferees. If you or the conferees should have any questions regarding CFP Board or the individuals it certifies, please contact me at 703-414-5814 or mherndon@CFP-Board.org.