REGULATORY/LEGISLATIVE
5 top priorities for NAPFA’s public policy advocacy
By Dan Danford, Jason Howell, and Chris Jennings
If there were a musical theme to describe our tumultuous political and public policy environment, it might be Elvis Presley’s “All Shook Up” or The Doors’ “Riders on The Storm.” To rise above the fray and be effective in the world of policy, an organization must have a strong voice. NAPFA consistently demonstrates that it has a strong voice that is heard and recognized in our nation’s capital, across the states, and throughout the financial planning profession.
NAPFA engages in a consistent, ongoing dialogue with legislators, policymakers, and thought leaders on current and emerging legislative and regulatory developments that affect your clients and your business. NAPFA doesn’t win every battle—no one does. But through NAPFA’s public policy program, we can ensure that your concerns as NAPFA advisors are reflected in the public debate.
NAPFA is recognized as a leading advocate for the financial planning profession and for American consumers. Our NAPFA public policy team creatively leverages our resources at hand. These include the NAPFA advisors who volunteer on our public policy committee and provide practitioner insights on significant developments; a national law firm that serves as our Washington, D.C.-based federal lobbyist; and our public policy counsel who advises on and coordinates our efforts.
We also work closely with several key coalitions and national organizations that share our issues and concerns. NAPFA’s brand and reputation for integrity, competence, and fairness make us a sought-after advocacy partner. We collaborate with our partners to amplify NAPFA’s strong voice.
The public policy team focuses on current issues with nationwide impact; the five discussed below are particularly timely now.
1. Retirement security
We continue to advocate in support of a range of legislative and regulatory initiatives that would make retirement security a reality for all Americans. These initiatives include several bills in Congress that are attracting bipartisan support and that would encourage workplace and individual retirement savings options, lifelong financial education, and protections for seniors and vulnerable persons from financial exploitation.
2. Fiduciary standard for financial advice
Regulators’ efforts in recent years to crystallize the concept of “fiduciary” have likely increased consumer confusion. The federal Investment Advisers Act of 1940 clearly distinguishes between a fiduciary advice relationship and a brokerage sales relationship. We believe that policymakers and the public should use the term “fiduciary” to differentiate professionals who are required always to act in the best interests of their clients from others who are not required to do so. Anyone who holds themselves out as a “fiduciary” should be held, both legally and in the marketplace, to the highest standards of professional conduct.
We continue to call for a robust fiduciary standard of care for all personalized financial advice. While we recognize that the SEC’s Regulation Best Interest can be seen as a step in the right direction, it leaves many issues unresolved. Even the most experienced members of our profession are asking serious questions about its application, enforcement, and effectiveness. Needless to say, consumers struggle to understand: “Who actually is a fiduciary, and what does the fiduciary standard mean for me?” A better answer may come from the DOL.
NAPFA played an important role in the development of the DOL’s 2016 fiduciary rule that, unfortunately, was overturned in 2018 by a federal appeals court. NAPFA continues to support DOL in proposing a new, updated DOL fiduciary rule during 2022. Industry opponents of a stronger ERISA fiduciary rule are fighting hard. Without an active lobbying campaign by NAPFA and other pro-fiduciary allies, political opinion may shift and derail the DOL’s effort to propose a new rule.
3. Advisor fee deductibility and tax credit
NAPFA supports restoring and expanding the federal tax deduction for professional investment and financial planning advice that was repealed by the 2017 Tax Cuts and Jobs Act. Reinstating and expanding the deductibility of advisory and planning fees, regardless of the type of account, and doing so in a straightforward manner, makes both good policy and good sense. We are committed to restoring fee deductibility in taxable accounts—and expanding it to accommodate consumers who do not itemize deductions.
We also urge Congress to consider allowing a tax credit for financial planning services to encourage low- and middle-income workers and households to get the fiduciary financial advice, products, and services they need.
4. Adequate SEC funding
NAPFA consistently has advocated for, and recently has written letters in support of, adequate funding for the SEC to fulfill its market oversight and investor protection missions. This was a popular topic during the financial crisis of 2008–2009 but has receded into the background as other issues have captured the public’s attention.
5. Fee guidance from NASAA and state regulators
Many NAPFA members offer their clients alternative fee arrangements that are consistent with both their fiduciary obligations and the NAPFA Fiduciary Oath. During 2020–2021, the public policy team reviewed a draft outline of a North American Securities Administrators Association (NASAA) regulatory policy group’s potential guidance on advisor fee models. We will work to maintain a frank, open, and constructive dialogue with NASAA as it formulates model fee guidance—and also with state regulators as they adopt advisor fee guidelines.
“You ain’t seen nothing yet!”
Your public policy team is active, productive, and committed to improving life for you and your clients. Returning to our musical theme, and in the words of Bachman Turner Overdrive, “You ain’t seen nothing yet!”
Dan Danford, CFP®, is chair of the NAPFA Public Policy Committee, of which Jason Howell, CFP®, and Chris Jennings, CFP®, are members. Danford is founder/CEO of Family Investment Center. Howell, a former U.S. congressional candidate, was named in 2019, 2021, and 2022 a “best financial adviser” by Washingtonian magazine. Chris Jennings, a member of NAPFA since 2019, is at Heron Wealth in Bronxville,NY. The authors wish to acknowledge Michael A. Watkins, NAPFA public policy counsel since 2013 and president and general counsel of Financial Markets Consultants LLC, for his contributions to this article.
image credit: istock.com/Douglas Rissing