by Brian Mahany
Not a month goes by without at least one blog post on securities fraud and the FINRA arbitration process. FINRA is short for the Financial Industry Regulatory Authority. FINRA has become a powerful regulator in recent years and hasn’t been afraid to wield its disciplinary muscle. Compared to stockbrokers, self regulation of financial planners is still in its infancy, however. That is starting to change.
Certified Financial Planners are mostly independent operators. There are no Bear Stearns or Ameriprise sized businesses in the financial planner universe. Lately, however, CFP’s have begun to market their expertise and professionalism. According to the CFP website, 62,000 people have earned the right to call themselves certified financial planners.
That’s great but what happens when your planner mishandles your account or worse?
The FINRA regulatory scheme for stockbrokers includes mandatory reporting of complaints, the ability to levy heavy fines and a simplified arbitration process for members of the public who feel a stockbroker defrauded them.
In a recent announcement, the Securities and Exchange Commission has said that the CFP Board of Standards can require planners and hopeful planners to disclose details about customer complaints. Without full reporting of complaint details and history, properly performing background checks or investigating complaints is virtually impossible.
Hopefully more transparency will result in fewer complaints. Unfortunately, however, members of the public rarely check up on their advisors. It’s not uncommon for someone to perform more due diligence on the person who cuts their lawn than on the person who handles their life savings. Still, full transparency will make it difficult for rogue planners to find work and easier for the CFP Board to pull their “CFP” designation.
It’s a baby step but still a step in the right direction.
Mahany & Ertl is a boutique law firm that concentrates on financial fraud and asset recovery. Stockbroker fraud, investment fraud, Ponzi schemes or bad advice from a financial planner? We can help. Call Brian Mahany for a confidential, no obligation consultation. Brian can be reached at (414) 704-6731 (direct) or at
Mahany & Ertl, LLC – Fraud, Asset Recovery, Tax Resolution and White Collar Criminal Lawyers. Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services nationwide.