On March 30, 2007, the Financial Planning Association made history by winning a lawsuit that vacated SEC Rule 202(a)(11)-1. This forced brokers to become SEC-regulated advisors, and helped to create a division of the two hats in the financial services industry: fiduciary and suitability. This was the one of the first times that the American public was exposed to a discussion that had long been brewing in the financial planning profession, and the fight to improve the fiduciary standard in the financial services industry continues on today. In this episode, we hear from Elizabeth Jeton, Dave Yeske, and Nick Nickolette about the importance of FPA’s lawsuit against the SEC, how FPA is continuing to push for regulation, and why all of this is truly at the heart of our profession.

FPA’s lawsuit against the SEC baffled many on Wall Street because there was little financial gain for FPA and its members. The lawsuit was backed by FPA because it directly protected and impacted the American public, and the organization’s leadership knew that having the best interest of consumers in mind was always their number one priority. Nobody knew, when FPA first started to pursue the SEC lawsuit, how people would react. So many questions bubbled to the surface.

How will the media respond? Do we need additional partners and resources to make this happen? Where will we get the support we need?

The lawsuit was undoubtedly a push to protect financial planning clients across the country, and FPA members felt strongly that their organization was taking a true stand for their core values. The lawsuit itself was often likened to a case of David and Goliath. FPA was fighting against corporate giants to force regulation for fee-based wealth managers – and it was an uphill battle.

But the lawsuit had a much larger impact than simply increasing regulation. It was the first time the debate between suitability and fiduciary had a public forum. The FPA was in publications such as The Wall Street Journal, and the New York Times making the case for a fiduciary standard. They were taking a stand against brokers giving advice without abiding by the fiduciary standard as outlined by the Investment Act of 1940.

To this day, the FPA pushes for public education and their advocacy positions center around the fiduciary standard because the fight isn’t over. Every member is courageously fighting to provide a place for clients to come where they know they’ll be taken care of, and where they never doubt that their financial planner puts their interests above his or her own.  

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What You’ll Learn:

  • How the FPA’s lawsuit against the SEC came about
  • The full history of the SEC lawsuit, and what happened to cause FPA to win
  • Who was at the heart of the movement
  • How the FPA got involved
  • Ways that the FPA pushed for a more clear fiduciary standard, and promoted direct regulation of fee-based financial advice
  • What financial planners are still doing today to fight for the fiduciary standard, public education, and better SEC regulation

 

FINANCIAL PLANNING ASSOCIATION v. SECURITIES AND EXCHANGE COMMISSION