FPANJ Issues and Positions - Financial Literacy Education
The FPANJ believes financial literacy is one of the most important issues facing individuals and families today. Changing demographics in the household and workplace require at least a fundamental knowledge of personal finance to function in today's society.
If begun early enough, the FPANJ believes basic financial planning education could help avoid many of the problems consumers encounter in later life, such as not saving enough for retirement, accumulating too much or inappropriate debt, or not having a minimum down payment saved for a home.
Although many efforts have been made to provide this information on an ad-hoc and coordinated basis, we believe the emphasis should be on education via the public school system. The New Jersey Legislature passed a high school financial education bill that established a three-year trial in certain districts, beginning in 2010. The trial ends June 2013. The FPANJ supports the permanent inclusion of financial education in the high school.
A recent survey of adults over 18 shows that 44% gained their financial literacy knowledge at home and 80% admit they could benefit from advice on everyday financial questions.
The FPANJ believes its members can be a critical resource in supporting high school financial education, at the local level.
Links:
Financial literacy lacking among high school students: http://www.fa-mag.com/fa-news/2546-.html
NJ high school financial education bill: http://www.politickernj.com/jbutkowski/35117/sweeney-bill-establishing-financial-literacy-program-signed-law
Setting a standard for financial literacy: http://www.investmentnews.com/article/20120304/REG/303049979
FPANJ Issues and Positions - Financial Fraud Prevention
The FPANJ believes financial fraud is a serious concern to the public and is harmful to the financial services industry.
The financial industry has grown significantly in the last twenty years and numerous products and services have been introduced to address consumers financial issues. Unfortunately, some financial representatives have abused their responsibility to their clients.
Financial fraud comes in many forms and must be addressed. The New Jersey Attorney General, Department of Banking and Insurance (DOBI), and the Department of Securities are involved in the prevention and prosecution of offenders. The FPANJ supports financial fraud prevention and has participated in local and national financial fraud prevention programs. The FPANJ should continue to participate in financial fraud prevention and support these agencies in their fraud prevention activities.
The FPANJ was instrumental in the introduction and passing of the "Senior Financial Designation Abuse" law, in 2010.
The FPANJ members adhere to the FPA Code of Ethics and Standard of Care Guidelines, as required for membership. The FPANJ CFP certificants participate in the CFP Board ethics and discipline program to maintain their CFP designation.
Links:
Sate security regulators release top ten scams, schemes & scandals:
http://www.nj.gov/oag/ca/erdos/investtips.htm
Financial elder-abuse rampant:
http://www.investmentnews.com/article/20120513/REG/305139986
Senior Financial Designation Abuse Law:
http://3164-politickernj-com.voxcdn.com/thester/39395/schaer-milam-wisniewski-bill-protect-seniors-bogus-financial-closer-becoming-law
FPANJ Issues and Positions - Financial Planning Coalition Support
Financial Planning Coalition Support:
The Financial Planning Coalition is comprised of Certified Financial Planner Board of Standards (CFP Board), the Financial Planning Association® (FPA®), and the National Association of Personal Financial Advisors (NAPFA).
Dodd-Frank Section 914: Enhancing Investment Adviser Oversight
WASHINGTON, DC (April 25, 2012) – The Financial Planning Coalition released the following statement in response to the introduction of the Investment Adviser Act of 2012, sponsored by House Financial Services Committee Chairman Spencer Bachus and Representative Carolyn McCarthy: “While we agree with Chairman Bachus that better oversight of investment advisers is needed, we oppose the legislation introduced in the House of Representatives. As a recent Boston Consulting Group study found, outsourcing SEC oversight to a new SRO (self-regulating organization) would be twice as expensive as directing adequate resources to the current SEC oversight program. Building on the SEC’s existing infrastructure and experience is a better option than creating an added layer of regulation, and could be accomplished more quickly and effectively, and at far less cost. Also a recent survey of Investment Advisers by the Massachusetts Securities Division showed the impact of an SRO was firm's were less likely to hire or retain staff members. The study also showed many small adviser firms in Massachusetts would be put out of business if an SRO solution were adopted.
Background on Section 914. The proposed IA SRO was one of three options recommended by the SEC in a Study under Section 914 of Dodd-Frank (“SEC 914 Study”) to increase the frequency of examinations of investment advisers, which currently average about once every eleven years. The Study also recommended: (1) authorizing the SEC to collect user fees to enhance its oversight of investment advisers; and (2) authorizing FINRA to examine dually registered broker-dealer and investment adviser firms for compliance under the Investment Advisers Act of 1940. Missing from the SEC’s Section 914 Study and from the debate and testimony associated with the original SRO proposal from Rep. Bachus was any hard data related to the cost of the options for enhancing investment adviser oversight.
Boston Consulting Group Study. The Financial Planning Coalition, in collaboration with other organizations, addressed this lack of data by engaging BCG to conduct an economic analysis of the options that the SEC recommended to Congress. BCG modeled the annual costs of an enhanced SEC oversight program as well as the costs of a FINRA-IA SRO and a New-IA SRO. BCG assumed that for all scenarios, investment adviser examinations would be increased to once every four years. BCG found that creating an SRO for investment advisers would likely be twice as expensive as funding an enhanced SEC examination program and membership fees for an SRO would be twice as expensive for investment advisory firms as user fees for an enhanced SEC examination program.
Dodd-Frank Section 913: Fiduciary Standard for Personalized Investment Advice
The Financial Planning Coalition, in collaboration with Consumer Federation of America (CFA), AARP, the Investment Adviser Association (IAA) and Fund Democracy, submitted a letter to the SEC on March 28, 2012 with a proposed roadmap for the development of rule that would establish a uniform fiduciary duty for broker-dealers and investment advisers. The letter proposed a compromise framework for the rulemaking that started with a framework proposed by Securities Industry and Financial Markets Association (SIFMA) in July 2011. The letter highlighted areas of agreement with SIFMA’s proposed framework and offered alternative policy approaches where we disagreed.
Links:
Financial Planning Coalition Announces United Opposition to Legislation Creating an SRO for Investment Advisers
http://www.financialplanningcoalition.com/docs/assets/EAC07EDD-E7A0-7427-B20E79D7FD969AEC/SRO_for_Investment_Advisers.pdf
Bob Veres on Bachus/McCarthy Bill:
http://advisorperspectives.com/newsletters12/How_to_Respond_to_the_Bachus-McCarthy_Bill.php
Report On The Potential Impact Of The Investment Adviser Oversight Act of 2012 On Small Advisers
http://www.sec.state.ma.us/sct/sctpdf/Report_on_IA_Impact.pdf
FPANJ Issues and Positions - Financial Planning and Health Care Costs
Financial Planning and Health Care Costs
The FPANJ believes that health care costs will be a significant issue in clients' retirement planning. Clients are requiring more information on health care issues as they plan for retirement. The FPANJ believes financial planners are in a unique position to assist clients with health care planning issues.
Financial planners currently provide planning for insurance protection, including Medicare, Social Security, and health.
The FPANJ supports enhancing the financial process by reinforcing the discussion of health care planning.
A major source of escalating health care costs is the provision of health services for the uninsured and underinsured. Medicaid costs currently represent a significant portion of state budgets.
The FPANJ supports utilizing membership financial expertise to assist in the development of programs that reduce Medicaid costs and support state agencies in their efforts to reduce Medicaid costs.
Links:
FPA and Aetna have partnered to publish “Navigating Your Health Benefits for Dummies” book. It has recently been updated to include the new health care law (PPACA).
http://633woman.com/wp-content/uploads/2011/11/navigating-your-health.pdf
FPA’s thoughts on Health Care published in the October 2007 issue of Financial Advisor Magazine. Note the box at the end of the article “FPA is Planning a Distinct Voice in National Health-Care Debate.”
http://www.fa-mag.com/component/content/article/1766.html?magazineID=1&issue=85&Itemid=73
As safety net shrinks, medical costs will grow:
http://www.investmentnews.com/article/20120506/REG/305069992
Health becoming the new focus of wealth:
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20120513/REG/305139995
Medicaid Bigger than Education in State Budgets, ” New York Times, December 13, 2011:
http://www.nytimes.com/2011/12/14/us/in-downturn-medicaid-takes-up-more-of-state-budgets-analysis-finds.html