When working with a financial planner, you want to know that your finances are in the very best hands. To give you the reassurance you need, we look at some of the regulations that competent and trustworthy planners adhere to.

Who Sets and Oversees Financial Planner Regulations?

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are the key players in the regulatory landscape. Both entities work to ensure financial planners and other financial professionals adhere to established standards. The Certified Financial Planner Board of Standards (CFP Board) also sets specific criteria for financial professionals hoping to obtain their CFP designation.

The governing body ultimately depends on the services a financial planner provides. For example, the Securities and Exchange Commission (SEC) or a state agency would regulate a financial planner who is also an investment advisor. A financial planner who is also an insurance agent may need to obtain licenses from their state Department of Insurance.

How Do You Know If a Planner Is Certified?

According to FINRA, just about anyone can claim to be a financial planner, even someone without financial credentials. This means ensuring the person you choose to work with has trusted and verifiable qualifications is critical. Many regulatory bodies maintain online databases or directories where you can search for a specific financial planner. For example, if your planner claims to be a CFP, you can verify this through the CFP Board’s website.

Common Financial Planner Regulations

Financial planners follow a long list of stringent rules. While the specifics vary, some general regulations many planners adhere to include:

Education and Licensing: Financial planners typically hold at least a bachelor’s degree in a related field. They must also pass one or more exams to obtain various licenses, depending on the services they provide.

Certifications: Though not required, financial certifications are common among planners looking to establish credibility. Common designations include the CFP and the Chartered Financial Consultant (ChFC).

Ongoing Education: Every two years, the CFP Board requires certified planners to complete 30 continuing education (CE) hours to stay updated on industry changes.

Disclosure Processes: Financial planners usually must disclose potential conflicts of interest, their fee structures, and any affiliations.

Fiduciary Obligation: Planners that become fiduciaries must place their customers’ interests above their own. The goal is to ensure unbiased and customer-focused advice.

Questions to Ask Your Financial Planner

To gauge a planner’s adherence to regulations, consider asking:

  • What licenses and certifications do you hold?
  • Which regulatory bodies are you registered with?
  • Are you a fiduciary?
  • How will I know of any potential conflicts of interest?
  • Can you provide a breakdown of your fee structure?

How Do These Regulations Protect You?

The rules governing financial planners aren’t just bureaucratic red tape. They’re essential shields protecting your interests.

Ensured Competence 

The crux of any profession is its ability to provide competent service. In the financial world, this holds particularly true, as mistakes can have significant repercussions. This is why regulatory bodies place such a strong emphasis on mandatory education and training.

By setting rigorous standards for certification and licensure, these bodies ensure financial planners have demonstrated the utmost proficiency in their field. When you consult a qualified financial planner, you get the confidence that their advice is backed by industry-recognized credentials.

Ethical Safeguards 

Ethical guidelines, like the fiduciary standard, help ensure planners make recommendations based on your unique financial situation, goals, and risk tolerance, rather than external incentives, such as potential commissions they might earn. These regulations uphold the integrity of the financial planning process and maintain the trust clients place in their planners.

Conflict Resolution

Disagreements or issues can arise in any professional relationship, and regulatory bodies have established processes to resolve these conflicts. FINRA, for instance, offers mediation and formal arbitration hearings as part of its dispute resolution services. If you ever believe there’s been an oversight, misconduct, or violation of any sort, there are structured and impartial means of addressing your concerns.

At Ironwood Wealth Management, we’re here to guide you with the credibility and transparency you deserve. Contact us today to learn more about how we approach financial planning with the highest professional and ethical standards.Â