2015 English 306, Christolear Nathan Afshin Response to the new proposed labor department rules The Labor Department has proposed a set of rules and regulations that would put financial advisers under a fiduciary standard. This would legally require these advisers to put their clients’ interests above their own. While the spirit of these proposals is all in good intention, they will not be good for the investors or the industry and ought not to be enacted. Executive Summary Since the financial crisis, the trust in financial advisers has eroded deeply. Many have lost trust in not only the financial system but also individual advisers. Their loss of trust is not completely unwarranted, conflicts of interest do in fact exist within the financial services industry and they have dire consequences. Conflicted advice for financial advisers to their clients can lower the expected returns of the clients’ investments and lead to a cumulative billions in annual wealth that is lost in the U.S. economy. To combat this horrid phenomenon, the U.S. Labor Department has proposed a set of rules and regulations that would put a federal law in place that puts a fiduciary standard on financial advisers. This standard would legally require financial advisers to put the interest of the clients above the interests of the adviser. Although this may seem adequate and necessary on the surface, these rules would put a damper on the financial services industry and would end up hurting the very people trying to be protected. These rules would not work because they would cause a regulatory overlap and could end up reducing options for smaller investors. Instead of proposing rules that would hurt the industry and consumers or rather do nothing at all and stick with the horrid status quo, I have proposed a solution. This proposal would be a private, objective nonprofit body that ensures the financial industry can fix itself rather than be attempted to be fixed by an outside body. This way we will be able to write our own destiny, rather than be told what it is. This non-profit body, with a tentative name of The Financial Ethics Body, will be funded by financial services companies that participate in this plan as a fixed percentage of their profits. By participating in the program, companies will have an ethics audit every six months to ensure that all of their employees are behaving in the most ethical way possible. If they pass this audit, companies will get an accreditation. I know some might say, “Why would any company pay dues to get audited with no guarantee of passing”, and I will tell you why. Companies will participate in this curriculum because it will become a nationwide standard to have and will show the public that a company is trustworthy and therefore eligible for their business. Not having this accreditation will be a red flag for businesses and drive potential clients away. This is, without a doubt, the best possible solution to this problem. Na.

1. 2015
English 306, Christolear Nathan Afshin
Response to the new proposed labor department rules
The Labor Department has proposed a set of rules and
regulations that would put financial advisers under a fiduciary
standard. This would legally require these advisers to put their
clients’ interests above their own. While the spirit of these
proposals is all in good intention, they will not be good for the
investors or the industry and ought not to be enacted.
Executive Summary
Since the financial crisis, the trust in financial advisers has
eroded deeply. Many have lost trust in not only the financial
system but also individual advisers. Their loss of trust is not
completely unwarranted, conflicts of interest do in fact exist
within the financial services industry and they have dire
consequences. Conflicted advice for financial advisers to their
clients can lower the expected returns of the clients’
investments and lead to a cumulative billions in annual wealth
that is lost in the U.S. economy.
To combat this horrid phenomenon, the U.S. Labor Department
has proposed a set of rules and regulations that would put a
federal law in place that puts a fiduciary standard on financial
advisers. This standard would legally require financial advisers
to put the interest of the clients above the interests of the
adviser. Although this may seem adequate and necessary on the
surface, these rules would put a damper on the financial
services industry and would end up hurting the very people

2. trying to be protected. These rules would not work because they
would cause a regulatory overlap and could end up reducing
options for smaller investors.
Instead of proposing rules that would hurt the industry and
consumers or rather do nothing at all and stick with the horrid
status quo, I have proposed a solution. This proposal would be a
private, objective nonprofit body that ensures the financial
industry can fix itself rather than be attempted to be fixed by an
outside body. This way we will be able to write our own
destiny, rather than be told what it is. This non-profit body,
with a tentative name of The Financial Ethics Body, will be
funded by financial services companies that participate in this
plan as a fixed percentage of their profits. By participating in
the program, companies will have an ethics audit every six
months to ensure that all of their employees are behaving in the
most ethical way possible. If they pass this audit, companies
will get an accreditation. I know some might say, “Why would
any company pay dues to get audited with no guarantee of
passing”, and I will tell you why. Companies will participate in
this curriculum because it will become a nationwide standard to
have and will show the public that a company is trustworthy and
therefore eligible for their business. Not having this
accreditation will be a red flag for businesses and drive
potential clients away. This is, without a doubt, the best
possible solution to this problem.
Nathan Afshin
English 306, Christolear
04/25/2015
Final Proposal: Rough Draft
Handling of money is a very emotional task for most people and
yet the vast majority of people are not financially savvy enough
to manage their money for retirement and investments
effectively. This causes many people to turn to a professional
for assistance, a financial adviser. Finding the right financial

3. adviser is not an easy task and many people run into issues
when trying. These issues can be insignificant such as a lack of
rapport between adviser and client, but far too many times they
can be serious. The worst issue is when a conflict of interest
between the adviser and client exists and this issue happens far
too often.
In an attempt to combat this issue of conflicting interests
between clients and advisers, the Labor Department has drafted
a set of rules and regulations that require advisers to have in
place a fiduciary standard for their clients. This standard would
legally require advisers to put the interests of their clients
above their own interests. Although these proposals have been
finalized yet, they are still getting strong opinions from both
sides of the argument. While President Obama endorses the
proposed regulations, many, even within his own political party,
have serious doubts. Sen. Jon Tester (D., Mont.) stated in an
interview with the Wall Street Journal that “If this takes away
options and the rules are not harmonized [with SEC] it will be a
disaster…we ought to be increasing options, not limiting them”
(Ackerman).
There are many reasons why these proposals would not produce
their desired effect and might actually be counter intuitive and
hurt, rather than help, consumers. First off, a large majority of
financial advisers are governed and regulated by state rules,
rather than federal guidelines from the Securities Exchange
Commission, or SEC. Found on the SEC’s website under the
section of General Information on the Regulation of Investment
Advisers, it is stated that “Generally only larger advisers that
have $25 million or more of assets under management or that
provide advice to investment company clients are permitted to
register with the Commission”. This would lead to the proposed
rules only affecting a portion of the advisers and leaving a large
majority with business as usual rules and regulations. Another
reason why these proposed rules would not help and could
actually produce adverse effects if the fact that many advisers,
while may not be under a legal fiduciary standard by federal

4. law, have a fiduciary duty in regard to state law. “Regardless of
whether a financial adviser qualifies as an ‘investment adviser’
under the federal securities laws, and so is a fiduciary under
federal law, the adviser may be an agency of the client under
the common law of agency. In such situations, as a matter of
state agency law, the adviser is a fiduciary who will be subject
to liability for any breach of his fiduciary duties to the client”
(Sitkoff).This fact produces two key factors that would serve as
a rebuttal to the proposed rules. The first factor is that by and
large there are already fiduciary standards set in place for
financial advisers, mitigating the need for the proposed rules
laid out by the Department of Labor. The second factor is that
having two layers of regulation from two separate entities in
regards to the same actions creates a confusing and unnecessary
overlap that can make it harder for financial advisers to help
clients’ meet their goals. The added bureaucracy would not only
make it harder for the advisers to do business but also could
reduce options for clients.
I am in no way advocating a message that states that the status
quo is okay and we should continue doing it. Conflicting
interests between advisers and clients is a serious issue with
massive consequences that not only affect the individuals
engaged in the relationship but the economy as a whole and this
can be seen by chilling statistics. In a report published by The
Council of Economic Advisers, we can see the impact of bad
advice that is a result of conflicts of interest. These statistics
include returns on average of roughly one percentage point
lower than the returns of investments governed by an adviser
with no conflict of interest, an estimated aggregate annual cost
of $17,000,000,000 due to conflicted investment advice and an
estimated loss of $12,000 from transferring over a retirement
account for the average American (Taverna). It is clear that this
is a major issue that results in massive amounts of wealth being
lost from the economy. As everyone in America, absent a
tragedy that causes someone to die young, will eventually retire,
not only is this issue tragic but it also affects just about

5. everyone in the country.
My proposal is of a private, objective nonprofit body that
ensures the financial industry can fix itself rather than be
attempted to be fixed by an outside body. This way we will be
able to write our own destiny, rather than be told what it is.
This non-profit body, with a tentative name of The Financial
Ethics Body, will be funded by financial services companies
that participate in this plan as a fixed percentage of their
profits. By participating in the program, companies will have an
ethics audit every six months to ensure that all of their
employees are behaving in the most ethical way possible. If
they pass this audit, companies will get an accreditation. I know
some might say, “Why would any company pay dues to get
audited with no guarantee of passing”, and I will tell you why.
Companies will participate in this curriculum because it will
become a nationwide standard to have and will show the public
that a company is trustworthy and therefore eligible for their
business. Not having this accreditation will be a red flag for
businesses and drive potential clients away. Another
requirement of The Financial Ethics Body is that all financial
advisers in The Financial Ethics Body certified firms must have
their Certified Financial Planner certification. This is a
prestigious certification that has several strict guidelines and
leads to better advisers and more satisfied clients.
Of all of the ideas that I have heard, I am confident that the
establishment of The Financial Ethics Body is the best one. This
is because it is a fluid and dynamic way to get the various
players in our field to contribute ideas and feedback. I’m sure
most of you will agree with the statement that those who best
know how to better the financial industry are those that are a
part of it. Having this program would make sure that those in
the field make the rules and guidelines, as opposed to an outside
body such as the SEC. Adapting these rules will gain the trust
of the public and also lessen the pressure from regulators to
step in. It will be flexible enough so that if there is anything
that needs to be changed, it will be fixed, as opposed to

6. government regulations, which are more static and slower to
change. The objectivity of the body will ensure that the system
is not manipulated and maintains its integrity.
Regulatory Overlap
Many financial planners are already regulated by their state, so
having more regulations from the SEC and/or labor department
would be both unnecessary and create a confusing and difficult
to maneuver regulatory overlap. In an article from the FDIC, it
is stated that “The difficulty in coordinating regulatory actions
and procedures, however, results in inefficiencies—delaying the
resolution of issues. Such delays can impose a significant
burden on financial institutions, possibly raising the cost of
product development or deterring it entirely” (Kushmeider).
These inefficient regulatory overlaps would reduce innovative
inventions within the financial services industry that would
ultimately hurt the consumer.
Another unintended consequence of regulatory overlap could be
giving certain institutions an unfair advantage over their peers.
The article goes on to state that “Overlap and duplication of
responsibilities can also result in conflicting rulings from the
regulatory agencies that can be difficult to resolve and that can
create opportunities for the same regulation or law to be applied
unevenly to different institutions—potentially resulting in a less
than level playing field” (Kushmeider). Having a regulatory
system in place that picks winners and losers would result in a
reduction of competition across the financial services industry.
As anyone that has taken an economics class will know, more
often than not reducing competition would hurt the industry as a
whole, reduce service, reduce innovation, and ultimately hurt
the consumers by limiting their options.
Not only would these rules produce the result of regulatory
overlap, they would also add to the already onerous number of
regulations in this already highly regulated industry. This would
create an unnecessary burden that would put chains on the back
of this industry and hurt its further growth. In a memorandum to
the executive office of the United States, Cass R. Sunstein,

7. emphasizes Executive Order 13563 that was written by the
president in January 18th, 2011. This executive order states that
“sectors and industries face a significant number of regulatory
requirements, some of which may be redundant, inconsistent, or
overlapping,” and it directs agencies to promote “coordination,
simplification, and harmonization” (Sunstein). These proposals
for placing a fiduciary standard on financial planners would go
against just about every aspect of this executive order that the
president drew out.
Why requiring the CFP certification would help to resolve this
problem
Education:
Having a mandate for CFP certified financial planners would
help in a number of ways. The first way in which it would help
to ensure only adequate and ethically behaving advisers to join
the firm would due to the CFP certification not being an easy
thing to achieve. This would filter out current and prospective
employees out of the industry that are not entirely serious or
passionate about financial planning and are more than likely
looking at that career in order to be the next Gordon Gekko. All
current employees would have a year to get certified, and the
cost of the test would be paid for by the employer. This would
allow current financial planners to upgrade their skills and
qualifications and ensure that, longer term, only adequately
qualified candidates would be drawn to this field.
For those that are skeptical of the necessity of a CFP license
must look at the issue in terms of education. No one would want
a doctor that was not as educated as the industry standard, and
they should think no differently about their financial planner.
The CFP Board has rigorous education standards that not only
apply to getting the certification, but also to keeping it. With
the current system in place, a degree of any kind is not even
necessary in order to be a financial planner. Granted, financial
planners that do not have any sort of education are not that
likely to have a successful career, there is no universal standard

8. set in place and this damages the industry by causing the public
to doubt the planners’ abilities and motives. The CFP Board has
a rigorous education requirement in place that states:
“Unlike many financial advisors, CFP® professionals must
develop their theoretical and practical knowledge by completing
a comprehensive course of study at a college or university
offering a financial planning curriculum approved by CFP
Board. Applicants may also satisfy the education requirement
by submitting a transcript review or previous financial
planning-related course work. Or, they can show that they have
attained certain professional designations or academic degrees
that cover the important subjects in CFP Board’s financial
planning curriculum” ("For CFP® Professionals.").
Just first completing their education requirement is nowhere
near the end of education for Certified Financial Planners. They
must continually reeducate themselves just to keep their
certification. CFP’s must complete thirty hours of continuing
education, two of which are ethics related questions, every two
years if they wish to renew their license. This will ensure that
not only highly educated and qualified financial planners are
hired, but also that they stay educated and qualified.
Ethics
While the specifics of the ethics guidelines have yet to be set,
one resource could be a tremendous guide. The CFP board has a
set of guidelines in regards to ethics that all members must pass
in order to be a Certified Financial Planner that can be viewed
on the CFP Board’s website and a failure to meet these
guidelines can lead to stripping of the CFP certification. As
stated on the Rules of Conduct section of the CFP Board
website, they make clear that these rules are meant to be taken
seriously and are “not designed to be a basis for legal liability
to any third party” ("For CFP® Professionals."). There exist on
the CFP Board a set of seven principles for ethics that the board
imposes on their members and these principles ought to be
adopted into the Financial Ethics Body. These principles

9. include principle 1, “Integrity: Provide professional services
with integrity”, principle 2, “Objectivity: Provide professional
services objectively”, principle 3, “Competence: Maintain the
knowledge and skill necessary to provide professional services
competently”, principle 4, “Fairness: Be fair and reasonable in
all professional relationships. Disclose conflicts of interest”,
principle 5, “Confidentiality: Protect the confidentiality of all
client information”, principle 6, “Professionalism: Act in a
manner that demonstrates exemplary professional conduct”
principle 7, “Diligence: Provide professional services
diligently.”
Works Cited
Ackerman, Andrew, and Karen Damato. "Obama Backs New
Rules for Brokers on Retirement Accounts." WSJ. Wall Street
Journal, 23 Feb. 2015. Web. 25 Apr. 2015.
"For CFP® Professionals." Rules of Conduct. CFP Board, n.d.
Web. 25 Apr. 2015.
"General Information on the Regulation of Investment
Advisers." General Information: Regulation of Investment
Advisers. Securities Exchange Commission, n.d. Web. 25 Apr.
2015.
Kushmeider, Rose M. "Each Depositor Insured to at Least
$250,000 per Insured Bank." FDIC: FDIC Banking Review.
FDIC, n.d. Web. 05 May 2015.
Pozen, Robert C. "Regulators Ban Financial Advice Fees and
Conflicts." The Brookings Institution. The Brookings
Institution, 09 Sept. 2013. Web. 02 May 2015.
Sitkoff, Robert H. "The Fiduciary Obligations of Financial
Advisers under the Law of Agency." Journal of Financial
Planning, 01 Feb. 2014. Web. 05 May 2015.
Sunstein, Cass R. "Cumulative Effects of Regulation."

10. EXECUTIVE OFFIC E OF THE PRES IDENT OFFICE OF
MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503
(n.d.): n. pag. Whitehouse.gov. Office of Information and
Regulatory Affairs, 20 Mar. 2012. Web. 05 May 2015.
Taverna_A. THE EFFECTS OF CONFLICTED INVESTMENT
ADVICE ON RETIREMENT SAVINGS (n.d.): n. pag.
Permanent Access GPO. Council of Economic Affairs, Feb.
2015. Web. 05 May 2015.
2015
English 306, Christolear Nathan Afshin
Response to the new proposed labor department rules
The Labor Department has proposed a set of rules and
regulations that would put financial advisers under a fiduciary
standard. This would legally require these advisers to put their
clients’ interests above their own. While the spirit of these
proposals is all in good intention, they will not be good for the
investors or the industry and ought not to be enacted.
Executive Summary
Since the financial crisis, the trust in financial advisers has
eroded deeply. Many have lost trust in not only the financial
system but also individual advisers. Their loss of trust is not
completely unwarranted, conflicts of interest do in fact exist
within the financial services industry and they have dire
consequences. Conflicted advice for financial advisers to their
clients can lower the expected returns of the clients’
investments and lead to a cumulative billions in annual wealth
that is lost in the U.S. economy.

11. To combat this horrid phenomenon, the U.S. Labor Department
has proposed a set of rules and regulations that would put a
federal law in place that puts a fiduciary standard on financial
advisers. This standard would legally require financial advisers
to put the interest of the clients above the interests of the
adviser. Although this may seem adequate and necessary on the
surface, these rules would put a damper on the financial
services industry and would end up hurting the very people
trying to be protected. These rules would not work because they
would cause a regulatory overlap and could end up reducing
options for smaller investors.
Instead of proposing rules that would hurt the industry and
consumers or rather do nothing at all and stick with the horrid
status quo, I have proposed a solution. This proposal would be a
private, objective nonprofit body that ensures the financial
industry can fix itself rather than be attempted to be fixed by an
outside body. This way we will be able to write our own
destiny, rather than be told what it is. This non-profit body,
with a tentative name of The Financial Ethics Body, will be
funded by financial services companies that participate in this
plan as a fixed percentage of their profits. By participating in
the program, companies will have an ethics audit every six
months to ensure that all of their employees are behaving in the
most ethical way possible. If they pass this audit, companies
will get an accreditation. I know some might say, “Why would
any company pay dues to get audited with no guarantee of
passing”, and I will tell you why. Companies will participate in
this curriculum because it will become a nationwide standard to
have and will show the public that a company is trustworthy and
therefore eligible for their business. Not having this
accreditation will be a red flag for businesses and drive
potential clients away. This is, without a doubt, the best
possible solution to this problem.
Nathan Afshin

12. English 306, Christolear
04/25/2015
Final Proposal: Rough Draft
Handling of money is a very emotional task for most people and
yet the vast majority of people are not financially savvy enough
to manage their money for retirement and investments
effectively. This causes many people to turn to a professional
for assistance, a financial adviser. Finding the right financial
adviser is not an easy task and many people run into issues
when trying. These issues can be insignificant such as a lack of
rapport between adviser and client, but far too many times they
can be serious. The worst issue is when a conflict of interest
between the adviser and client exists and this issue happens far
too often.
In an attempt to combat this issue of conflicting interests
between clients and advisers, the Labor Department has drafted
a set of rules and regulations that require advisers to have in
place a fiduciary standard for their clients. This standard would
legally require advisers to put the interests of their clients
above their own interests. Although these proposals have been
finalized yet, they are still getting strong opinions from both
sides of the argument. While President Obama endorses the
proposed regulations, many, even within his own political party,
have serious doubts. Sen. Jon Tester (D., Mont.) stated in an
interview with the Wall Street Journal that “If this takes away
options and the rules are not harmonized [with SEC] it will be a
disaster…we ought to be increasing options, not limiting them”
(Ackerman).
There are many reasons why these proposals would not produce
their desired effect and might actually be counter intuitive and
hurt, rather than help, consumers. First off, a large majority of
financial advisers are governed and regulated by state rules,
rather than federal guidelines from the Securities Exchange
Commission, or SEC. Found on the SEC’s website under the
section of General Information on the Regulation of Investment
Advisers, it is stated that “Generally only larger advisers that

13. have $25 million or more of assets under management or that
provide advice to investment company clients are permitted to
register with the Commission”. This would lead to the proposed
rules only affecting a portion of the advisers and leaving a large
majority with business as usual rules and regulations. Another
reason why these proposed rules would not help and could
actually produce adverse effects if the fact that many advisers,
while may not be under a legal fiduciary standard by federal
law, have a fiduciary duty in regard to state law. “Regardless of
whether a financial adviser qualifies as an ‘investment adviser’
under the federal securities laws, and so is a fiduciary under
federal law, the adviser may be an agency of the client under
the common law of agency. In such situations, as a matter of
state agency law, the adviser is a fiduciary who will be subject
to liability for any breach of his fiduciary duties to the client”
(Sitkoff).This fact produces two key factors that would serve as
a rebuttal to the proposed rules. The first factor is that by and
large there are already fiduciary standards set in place for
financial advisers, mitigating the need for the proposed rules
laid out by the Department of Labor. The second factor is that
having two layers of regulation from two separate entities in
regards to the same actions creates a confusing and unnecessary
overlap that can make it harder for financial advisers to help
clients’ meet their goals. The added bureaucracy would not only
make it harder for the advisers to do business but also could
reduce options for clients.
I am in no way advocating a message that states that the status
quo is okay and we should continue doing it. Conflicting
interests between advisers and clients is a serious issue with
massive consequences that not only affect the individuals
engaged in the relationship but the economy as a whole and this
can be seen by chilling statistics. In a report published by The
Council of Economic Advisers, we can see the impact of bad
advice that is a result of conflicts of interest. These statistics
include returns on average of roughly one percentage point
lower than the returns of investments governed by an adviser

14. with no conflict of interest, an estimated aggregate annual cost
of $17,000,000,000 due to conflicted investment advice and an
estimated loss of $12,000 from transferring over a retirement
account for the average American (Taverna). It is clear that this
is a major issue that results in massive amounts of wealth being
lost from the economy. As everyone in America, absent a
tragedy that causes someone to die young, will eventually retire,
not only is this issue tragic but it also affects just about
everyone in the country.
My proposal is of a private, objective nonprofit body that
ensures the financial industry can fix itself rather than be
attempted to be fixed by an outside body. This way we will be
able to write our own destiny, rather than be told what it is.
This non-profit body, with a tentative name of The Financial
Ethics Body, will be funded by financial services companies
that participate in this plan as a fixed percentage of their
profits. By participating in the program, companies will have an
ethics audit every six months to ensure that all of their
employees are behaving in the most ethical way possible. If
they pass this audit, companies will get an accreditation. I know
some might say, “Why would any company pay dues to get
audited with no guarantee of passing”, and I will tell you why.
Companies will participate in this curriculum because it will
become a nationwide standard to have and will show the public
that a company is trustworthy and therefore eligible for their
business. Not having this accreditation will be a red flag for
businesses and drive potential clients away. Another
requirement of The Financial Ethics Body is that all financial
advisers in The Financial Ethics Body certified firms must have
their Certified Financial Planner certification. This is a
prestigious certification that has several strict guidelines and
leads to better advisers and more satisfied clients.
Of all of the ideas that I have heard, I am confident that the
establishment of The Financial Ethics Body is the best one. This
is because it is a fluid and dynamic way to get the various
players in our field to contribute ideas and feedback. I’m sure

15. most of you will agree with the statement that those who best
know how to better the financial industry are those that are a
part of it. Having this program would make sure that those in
the field make the rules and guidelines, as opposed to an outside
body such as the SEC. Adapting these rules will gain the trust
of the public and also lessen the pressure from regulators to
step in. It will be flexible enough so that if there is anything
that needs to be changed, it will be fixed, as opposed to
government regulations, which are more static and slower to
change. The objectivity of the body will ensure that the system
is not manipulated and maintains its integrity.
Regulatory Overlap
Many financial planners are already regulated by their state, so
having more regulations from the SEC and/or labor department
would be both unnecessary and create a confusing and difficult
to maneuver regulatory overlap. In an article from the FDIC, it
is stated that “The difficulty in coordinating regulatory actions
and procedures, however, results in inefficiencies—delaying the
resolution of issues. Such delays can impose a significant
burden on financial institutions, possibly raising the cost of
product development or deterring it entirely” (Kushmeider).
These inefficient regulatory overlaps would reduce innovative
inventions within the financial services industry that would
ultimately hurt the consumer.
Another unintended consequence of regulatory overlap could be
giving certain institutions an unfair advantage over their peers.
The article goes on to state that “Overlap and duplication of
responsibilities can also result in conflicting rulings from the
regulatory agencies that can be difficult to resolve and that can
create opportunities for the same regulation or law to be applied
unevenly to different institutions—potentially resulting in a less
than level playing field” (Kushmeider). Having a regulatory
system in place that picks winners and losers would result in a
reduction of competition across the financial services industry.
As anyone that has taken an economics class will know, more
often than not reducing competition would hurt the industry as a

16. whole, reduce service, reduce innovation, and ultimately hurt
the consumers by limiting their options.
Not only would these rules produce the result of regulatory
overlap, they would also add to the already onerous number of
regulations in this already highly regulated industry. This would
create an unnecessary burden that would put chains on the back
of this industry and hurt its further growth. In a memorandum to
the executive office of the United States, Cass R. Sunstein,
emphasizes Executive Order 13563 that was written by the
president in January 18th, 2011. This executive order states that
“sectors and industries face a significant number of regulatory
requirements, some of which may be redundant, inconsistent, or
overlapping,” and it directs agencies to promote “coordination,
simplification, and harmonization” (Sunstein). These proposals
for placing a fiduciary standard on financial planners would go
against just about every aspect of this executive order that the
president drew out.
Why requiring the CFP certification would help to resolve this
problem
Education:
Having a mandate for CFP certified financial planners would
help in a number of ways. The first way in which it would help
to ensure only adequate and ethically behaving advisers to join
the firm would due to the CFP certification not being an easy
thing to achieve. This would filter out current and prospective
employees out of the industry that are not entirely serious or
passionate about financial planning and are more than likely
looking at that career in order to be the next Gordon Gekko. All
current employees would have a year to get certified, and the
cost of the test would be paid for by the employer. This would
allow current financial planners to upgrade their skills and
qualifications and ensure that, longer term, only adequately
qualified candidates would be drawn to this field.
For those that are skeptical of the necessity of a CFP license
must look at the issue in terms of education. No one would want

17. a doctor that was not as educated as the industry standard, and
they should think no differently about their financial planner.
The CFP Board has rigorous education standards that not only
apply to getting the certification, but also to keeping it. With
the current system in place, a degree of any kind is not even
necessary in order to be a financial planner. Granted, financial
planners that do not have any sort of education are not that
likely to have a successful career, there is no universal standard
set in place and this damages the industry by causing the public
to doubt the planners’ abilities and motives. The CFP Board has
a rigorous education requirement in place that states:
“Unlike many financial advisors, CFP® professionals must
develop their theoretical and practical knowledge by completing
a comprehensive course of study at a college or university
offering a financial planning curriculum approved by CFP
Board. Applicants may also satisfy the education requirement
by submitting a transcript review or previous financial
planning-related course work. Or, they can show that they have
attained certain professional designations or academic degrees
that cover the important subjects in CFP Board’s financial
planning curriculum” ("For CFP® Professionals.").
Just first completing their education requirement is nowhere
near the end of education for Certified Financial Planners. They
must continually reeducate themselves just to keep their
certification. CFP’s must complete thirty hours of continuing
education, two of which are ethics related questions, every two
years if they wish to renew their license. This will ensure that
not only highly educated and qualified financial planners are
hired, but also that they stay educated and qualified.
Ethics
While the specifics of the ethics guidelines have yet to be set,
one resource could be a tremendous guide. The CFP board has a
set of guidelines in regards to ethics that all members must pass
in order to be a Certified Financial Planner that can be viewed
on the CFP Board’s website and a failure to meet these

18. guidelines can lead to stripping of the CFP certification. As
stated on the Rules of Conduct section of the CFP Board
website, they make clear that these rules are meant to be taken
seriously and are “not designed to be a basis for legal liability
to any third party” ("For CFP® Professionals."). There exist on
the CFP Board a set of seven principles for ethics that the board
imposes on their members and these principles ought to be
adopted into the Financial Ethics Body. These principles
include principle 1, “Integrity: Provide professional services
with integrity”, principle 2, “Objectivity: Provide professional
services objectively”, principle 3, “Competence: Maintain the
knowledge and skill necessary to provide professional services
competently”, principle 4, “Fairness: Be fair and reasonable in
all professional relationships. Disclose conflicts of interest”,
principle 5, “Confidentiality: Protect the confidentiality of all
client information”, principle 6, “Professionalism: Act in a
manner that demonstrates exemplary professional conduct”
principle 7, “Diligence: Provide professional services
diligently.”
Works Cited
Ackerman, Andrew, and Karen Damato. "Obama Backs New
Rules for Brokers on Retirement Accounts." WSJ. Wall Street
Journal, 23 Feb. 2015. Web. 25 Apr. 2015.
"For CFP® Professionals." Rules of Conduct. CFP Board, n.d.
Web. 25 Apr. 2015.
"General Information on the Regulation of Investment
Advisers." General Information: Regulation of Investment
Advisers. Securities Exchange Commission, n.d. Web. 25 Apr.
2015.
Kushmeider, Rose M. "Each Depositor Insured to at Least
$250,000 per Insured Bank." FDIC: FDIC Banking Review.

19. FDIC, n.d. Web. 05 May 2015.
Pozen, Robert C. "Regulators Ban Financial Advice Fees and
Conflicts." The Brookings Institution. The Brookings
Institution, 09 Sept. 2013. Web. 02 May 2015.
Sitkoff, Robert H. "The Fiduciary Obligations of Financial
Advisers under the Law of Agency." Journal of Financial
Planning, 01 Feb. 2014. Web. 05 May 2015.
Sunstein, Cass R. "Cumulative Effects of Regulation."
EXECUTIVE OFFIC E OF THE PRES IDENT OFFICE OF
MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503
(n.d.): n. pag. Whitehouse.gov. Office of Information and
Regulatory Affairs, 20 Mar. 2012. Web. 05 May 2015.
Taverna_A. THE EFFECTS OF CONFLICTED INVESTMENT
ADVICE ON RETIREMENT SAVINGS (n.d.): n. pag.
Permanent Access GPO. Council of Economic Affairs, Feb.
2015. Web. 05 May 2015.