WASHINGTON – Today U.S. Senator Herb Kohl included a study to look at the regulatory regime of financial planners as part of the Restoring American Financial Stability Act of 2010.  The bill was reported out of the Senate Banking, Housing and Urban Affairs Committee by a vote of 13 to 10.

“Today, no single law governs the delivery of financial planning advice to the public, and there is no easy way for consumers to identify a competent financial planner who is acting in their best interests,” Kohl said. “This has led to consumer confusion, misrepresentation, and fraud, particularly among our elderly consumers. This study is the first step toward resolving this regulatory gap and protecting consumers of financial planning services.”

Under Kohl’s provision, the Government Accountability Office will examine current oversight of the financial planning industry at the state and federal level.  It will consider whether financial planning services are being provided by individuals who are licensed for other professions, including insurance and investment advice, and to what degree consumers are aware of the different services being provided.  Additionally, the study will look at professional standards that currently govern financial planners and financial advisors.  GAO has also been asked to identify both regulatory and legislative fixes to any gaps in regulation that would strengthen oversight of financial planners.  The study will report to the Special Committee on Aging, as well as the Senate Banking, Housing and Urban Affairs Committee. 

This study is a continuation of his work on the issue of financial designations and protecting consumers from fraud and financial abuse.  In September 2007, the Special Committee on Aging – of which Kohl is chair – held a hearing to examine some of the questionable practices used by so-called senior financial investment specialists in order to gain access to the retirement savings of older Americans.  The Committee’s investigation revealed that many of these designations represent limited or no value with respect to advising seniors on financial matters, and that often these designations are obtained simply by attending a weekend seminar and passing an open-book, multiple-choice test.  Many seniors targeted by salesmen using these designations have lost their life savings because they were steered toward investment instruments that were unsuitable for them, given their retirement needs and life expectancy.

Kohl was also successful in including a provision included in the Restoring American Financial Stability Act to protect older Americans from fraud at the hands of unscrupulous financial advisors.  The provision is based on S. 1661, the Senior Investor Protection Act, which calls for the creation of a new grant program to assist states in their efforts to protect seniors from misleading financial advisor designations.  The U.S. House of Representatives included similar provisions in H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. 

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