Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, January 18, 2011

GAO Releases Study on Financial Planners

The GAO is another federal agency that has responsibilities under Dodd-Frank to prepare studies on various consumer and financial issues.  It recently released its report on financial planners, Regulatory Coverage Generally Exists for Financial Planners, but Consumer Protection Issues Remain.  Here is the summary:

Why GAO Did This Study
Consumers are increasingly turning for help to financial planners—individuals who help clients meet their
financial goals by providing assistance with such things as selecting investments and insurance products, and managing tax and estate planning.  The Dodd-Frank Wall Street Reform and Consumer Protection Act mandated that GAO study the oversight of financial planners. This report examines (1) how financial planners are regulated and overseen at the federal and state levels, (2) what is known about the effectiveness of this regulation, and (3) the advantages and disadvantages of alternative
regulatory approaches. To address these objectives, GAO reviewed federal and state statutes and
regulations, analyzed complaint and enforcement activity, and interviewed federal and state government entities and organizations representing financial planners, various other arms of the financial services industry, and consumers.

What GAO Recommends
GAO recommends that (1) NAIC assess consumers’ understanding of the standards of care associated with the sale of insurance products, (2) SEC assess investors’ understanding of financial planners’ titles and designations, and (3) SEC collaborate with the states to identify methods to better understand problems associated specifically with the financial planning activities of investment advisers. NAIC said it would consider GAO’s recommendation and SEC provided no comments.

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