Next Generation Planner: July 2022
Charlie Pastor, CFP®, is the director of advocacy for the Colorado chapter of the Financial Planning Association. He also serves as a financial planner in the Denver metropolitan area at Intellicents Investment Solutions, Inc.
For the new planner, entering the financial advice profession can be a whirlwind. While arbitrary contribution limits swirl around your head, the acronyms of three-letter regulatory agencies blur with the alphabet soup of credentials trailing every adviser’s last name. How can a new member of the financial planning community understand, let alone speak on behalf of, our profession? It all starts with a little time and passion.
We as financial planners know the benefits reaped tomorrow can greatly exceed the investments made today. Doubly so when the young financial planners selflessly give their limited time to champion a movement that will pay dividends throughout their careers. By becoming engaged in public policy advocacy, NexGen advisers can take an active role in protecting our profession, advocating for our clients, and growing professionally.
Why Do FPA’s Advocacy Efforts Matter?
The effect on our communities. Most advisers join our profession to serve the best interests of our clients, and public policy advocacy is integral to that commitment. The duty we owe to our clients extends beyond business hours and the logos on our office doors. It extends to wherever and whenever the interests of our clients are at stake. Our duty extends to early morning and late-night legislative sessions, throughout the halls of the 50 state capitols and the United States Congress.
The Financial Planning Association takes this commitment seriously by supporting financial literacy, supporting financial planners in how they want to charge fees, and opposing the taxation of financial planning services. By acting as a staunch supporter of financial education, both inside and outside of the classroom, the organization is taking an active step toward better informed communities. FPA recognizes that financial literacy is a vital component of helping Americans live healthy financial lives, and that financial literacy education in the United States is a particularly important goal. FPA encourages schools to teach the basic components of personal financial management to help with vital financial functions such as understanding credit, savings, loans, home and rent responsibilities, and how to manage debt responsibly.
The Financial Planning Association is currently tracking hundreds of legislative bills and proposed regulations across all 50 states. Under the tab “Find Legislation or Regulation in Your State or Congress,” FPA lists all the bills being tracked and tags them by topic. By offering this resource, and many others, the Financial Planning Association keeps FPA members and chapters up to date on legislation facing their communities. Being a public policy advocate means more than watching out for our profession—it means serving as a watchdog for our clients and their communities.
The effect on how we serve clients. As experienced financial professionals, we know how to serve our clients best while keeping our lights on and our doors open. But in a regulatory environment where the only guarantee is that things will change, best practices in our industry may come under threat.
In my home state of Colorado, an “Ongoing Financial Planning Guide” was issued by the Colorado Division of Securities, which requires financial planners have clear deliverables and demonstrate that the work has been completed every time a fee is deducted or charged. This applies to state-licensed investment advisers, which, by virtue of their size, would be disproportionately burdened by administrative requirements. FPA will submit comments to the Colorado securities department regarding this guide.
Earlier this year, Kentucky’s state legislature surprised the nation by introducing legislation to eliminate the state’s income tax and replace it with a tax on professional services spanning a wide variety of professions, including financial planning and investment advice. By levying an additional tax on financial planning, the bill would endanger our ability to serve our clients in a cost-effective manner. With the help of the FPA, we fought this bill—and won.
The nature of state governments is that they closely watch one another. Legislation that succeeds in one legislature may succeed in another. Should harmful or burdensome legislation win in Georgia, similar legislation may appear in Florida. In this way, waves of related legislation may sweep the nation in the wake of a single state’s victory. Therefore, it is vital to the landscape of our profession to closely monitor legislative and regulatory changes in all 50 states at all times.
This is an ongoing and present struggle. The bills mentioned above have been introduced since the beginning of 2022. Legislation being proposed and passed today includes bills that threaten our ability to operate in ways that benefit our clients, our communities, and our businesses.
Legislators need our expertise. When it comes to passing legislation, sometimes legislators don’t know what they don’t know. The last names of most state and federal legislators are so naked of credentials they would make a young adviser blush. When in doubt, many legislators seek out legislators who serve on a finance committee to become informed about legislation. While finance committee legislators may be well informed and experienced on general financial topics, their knowledge of the branch of personal finances may be limited.
In addition to serving as a lobbying effort on behalf of the profession, the Financial Planning Association serves as a resource to members of our state and federal legislatures. Annual state advocacy days not only give our members the opportunity to weigh in on pending legislation, but also serve as chances to offer up our expertise to legislators. As financial planners, much of our job is dependent on building strong relationships, and advocacy efforts are no different. When it comes to holding oneself out as a resource to legislators, a simple introduction can go a long way.
You Can Make a Big Difference
The Financial Planning Association’s advocacy efforts are already making waves—and we want you to get involved! Currently, the association boasts 80 chapters with active advocacy directors in addition to part-time advocacy staff and a Public Policy Council. With all that people power, we can meaningfully affect legislation pertinent to our clients, our practices, and ourselves. Here are a few of our recent victories:
Faced by Kentucky’s move to tax financial planners and investment management services, the Financial Planning Association and the FPA Political Action Committee joined forces to hire lobbyists to lobby to remove financial planners and investment management services from the legislation. The bid to protect planners succeeded, with our profession being exempted from the legislation following the 11th-hour intervention. After an overridden veto, the legislation will come into effect without affecting our fellow planners in the state of Kentucky. The legislation originally would have taxed 38 professions. We were one of three professions removed from the final legislation.
The Financial Planning Association and local chapters threw their support behind the Dorothy L. Hukill Financial Literacy Act in Florida, which would bring personal finance classes to high schools statewide. Joint efforts by FPA National and our Florida chapters lent support to the bill in the form of letters to legislators, culminating in a big win for our organization as well as the state of Florida and its students.
How Can You Get Involved?
Study up. Financial planners know the first step to getting where you’re going is knowing where you are. Public policy is no different. Before effecting change in your community, understand the political landscape. Is your state legislature a full-time or part-time legislature? How are bills introduced to the floor? Who are your representatives and what are their track records on personal finance topics? Are any members of the legislators or their spouses financial planners? These questions can be an excellent starting point toward understanding the foundations of your local and state governments.
Next, learn about FPA’s public policy positions. Under the Advocacy tab on the FPA website, explore the Policy Center, where you will find the “Advocacy Issues Fact Sheets” tab. These fact sheets cover everything you need to know about FPA’s public policy advocacy stance. Read up on the Policy and Vision statement to learn more about the standards we advocate for in our own profession. Additionally, find out more about issues that affect your community and clients, including how financial planners charge fees, financial literacy, and tax issues on one-page fact sheets.
After you’re up to speed on politics, look ahead at upcoming legislation and regulation. From the Policy Center, click “Find Legislation or Regulation in Your State or Congress.” Click on the map to find legislation in your state. Quickly see a bill’s topic, sponsor, and summary, using the clickable bill number to find more information, including the bill text. Be sure to check back often—new bills are being introduced frequently.
Get involved with your local FPA chapter’s advocacy committee. Next, get involved locally. Most FPA chapters have an advocacy committee or chairperson. If your chapter does not, ask your chapter president how to join the leadership board as a director of advocacy.
Advocacy committees serve a variety of important purposes. Typically, the committee tracks state bills while also keeping a pulse on local initiatives that affect their communities. Advocacy committees might host an annual advocacy day, where FPA members meet their legislators or regulators for a day on the State Capitol Hill. Throughout the year, the committee might schedule meetings with individual legislators or regulatory departments including the division of insurance and division of securities. This face time with representatives, governmental officials, and their staff serves as a vital link between government and our organization. By shaking hands, weighing in on upcoming legislation, and holding yourself out as a credible resource, you can act as an ambassador for our profession.
Advocacy efforts are not done in a vacuum. Advocacy committees frequently partner with pro bono efforts to promote financial well-being within their communities. Advocacy committee members also act as liaisons between the FPA chapter and legislators, meeting with chapter members to understand their concerns and keep them informed on relevant public policy issues. In these ways, advocacy committees serve as the network between our members, our legislators, and our communities.
Contribute to the FPA PAC. An easy way to further advocacy efforts at the state and federal level is by donating to the Financial Planning Association’s Political Action Committee. The federally registered FPA PAC may hire lobbyists on the state or federal level and makes contributions to candidates who have a proven track record of supporting financial planning issues. The FPA PAC is the only PAC that represents financial planners.
Through the power of public policy advocacy, you can become a difference maker. Take the first step by becoming educated on state and local politics, joining your chapter’s advocacy committee, or contributing to the FPA PAC. Your investment today will pay dividends in the fight for the future of our industry, our clients, and our communities.
Public Policy Resources
- FPA PAC. FPA’s Political Action Committee is the only federally registered PAC for financial planners and the financial planning profession.
- Advocacy Issues Fact Sheets. Learn more about FPA’s stance on issues that impact the financial planning profession.
- Legislation Tracker. See what legislation FPA is tracking in Congress and state houses across the country.
