Journal of Financial Planning: January 2015
Dan Moisand, CFP®, has been a practicing financial planner since 1991. He is a principal at Moisand Fitzgerald Tamayo LLC in Melbourne, Florida, former president of FPA, and a member of the Board of Trustees of the Foundation for Financial Planning.
It is notoriously difficult to get legislation passed in this country, even when a measure has strong bipartisan support. Conflicting interests and lots of money compete for the attention of lawmakers. Advocacy is hard work.
Relatively small populations, like the financial planning profession, have an even tougher time affecting policy than larger groups like the financial planning-related industry. Size is important but it isn’t everything and neither is money. Having a compelling position is critical, and the financial planning profession certainly has compelling positions.
Success in Florida
It’s always been a challenge to get the ear of policymakers. Media messaging, grassroots efforts, FPA-PAC, and other efforts all attempt this with mixed results. In recent years, another effort evolved here in Florida that’s producing positive results.
FPA of Florida started this effort at a meeting on June 25, 2004 in Saint Petersburg, Fla., where 23 people from six of the nine FPA chapters gathered to discuss a vision of forming an organization to meet the need for advocacy at the state level, funding, collaboration on joint projects and programs, and communication with each chapter represented.
By early 2005, the Florida Cooperative of FPA Chapters held its first regional advanced leadership retreat near Orlando. This was the first gathering of its kind in the nation. Chapters came together in a collaborative setting to share ideas on chapter programs, membership recruitment and retention, and lobbying efforts in Tallahassee. The meeting was facilitated by David Lawrence and Michael Zmistowski. I was pleased to be able to participate as national FPA president-elect. FPA national was an enthusiastic supporter of the initiative but a couple of the chapters were still taking a wait-and-see approach.
The first official annual meeting and election of an executive board came in 2006. My business partner, Charlie Fitzgerald III, became the group’s inaugural president, with Allen Arntzen its president-elect, and Matt McGrath its treasurer. Members serving as advisers included Michael Zmistowski, Paul Auslander, Regina Robuck, Kevin Poland, David Lawrence, Robin Clark, Dave Moran, and Leslie Kelly. They quickly set about securing a proclamation from then-governor Jeb Bush, recognizing 2006 Financial Planning Week and conducting the inaugural FPA Day at Florida’s capitol in April 2007.
Later in 2007, Paul Auslander, future national FPA president, was appointed to the Florida Financial Literacy Council and the first FPA of Florida newsletter was distributed.
Tallahassee was getting to know financial planners. By August 2008, Charlie Fitzgerald was appointed to state CFO Alex Sink’s financial action team, which was created to analyze the federal government’s 2008 Housing and Economic Recovery Act and determine how Florida citizens may fully benefit.
This year marked the group’s 16th trip to Tallahassee to advocate on behalf of FPA members. All chapters in the state have been on board for a few years now. Their agenda has become more substantial with each visit. Over the past seven years, FPA of Florida has developed strong relationships with several agencies in Tallahassee that influence public policy and affect our ability to practice financial planning.
On the most recent trip in October 2014, they met with three regulatory bodies: the Department of Business and Professional Regulation, the Office of Financial Regulations and the Division of Insurance Agents and Agency Services, and Florida’s Insurance Consumer Advocate.
Furthering the Profession
Has all this work and relationship-building done any good? Yes. It took some time, but such is the nature of relationship-building. FPA of Florida has wisely focused on areas of consumer protections. By putting clients’ interests first, they have been able to get the attention of policy makers and position the financial planning profession as something other than another collection of salespeople. I’ll give you two examples.
What do people do when they are banned from the securities industry? Well, in Florida, a fair number became insurance agents marketing fixed annuity products, particularly indexed annuities, in a misleading manner. Apparently, the insurance licensing laws gave the state no ability to consider the bad behavior of the people seeking insurance licensing, nor could the state investigate an agent until an insurance-specific complaint was filed.
Enter FPA of Florida, which helped entertain “reciprocity” with legislators in Tallahassee. It was clearly in the best interests of the people of Florida that the insurance regulators consider transgressions committed by applicants while working in the securities or other financial-related industries before issuing an insurance license.
In 2011, CFO Sink’s “Safeguard our Seniors” legislation became law. It increased penalties for abusive sales tactics toward seniors, enabled the state to deny several license applications because the would-be agents had violated other laws, and provided the state the power to strip an agent of his or her insurance license if they commit a severe enough violation of other financial regulatory bodies. As a result, complaints and investigations into annuity sales abuses have been dramatically reduced.
The insurance industry resisted the legislation, but financial planners fought for it and their support helped change Florida law. That made an impression.
This helped lay the groundwork for more success. Signed into law on July 1, 2014, FPA of Florida supported legislature to correct another insurance-related gap in consumer protection. In the past, the only people authorized to legally give advice on the details of an insurance policy were licensed insurance agents appointed to a licensed insurance company. In other words, Floridians had to deal with agents of the companies and had no source of independent third-party advice. That is a clear conflict of interest that consumers could not choose to accept or avoid.
FPA of Florida successfully supported legislation introduced by the Department of Financial Services for the creation of “unaffiliated insurance agents.” These agents, even CFP® practitioners, must pass all the same requirements of commissioned sales people, including testing and continuing education, but they are not required to be appointed by an insurance company. They can work directly for clients.
Emulating the Model
FPA of Florida’s successes bode well for the future. So much so that other states are looking to emulate the model. California, in particular, seems to be well on its way. Nationally, FPA continues to support the effort. A new state council task force is exploring pathways for chapters to form FPA state councils.
This is critical, because as I see it, FPA is the only organization that can pull this off on behalf of the financial planning profession. Other organizations are either too small, too tied to and conflicted by specific industry influences, or too restricted in the voracity of their advocacy efforts.\
It may not seem like much now, but we may soon be grateful for FPA’s expansion of its advocacy efforts beyond national issues. State-specific issues, such as taxes on services, can arise at any time, in any state. In the last year, there has been a marked uptick in chapters coming together to advocate in their state on behalf of issues that affect FPA members. Planners who have established relationships in their state capitols and speak with a credible, unified voice, will be better able to address these issues than those who are unprepared.