A trade association mostly made up of certified financial planners launched an initiative Thursday to add members from Ameriprise Financial, an outreach effort that has a fiduciary advocate questioning how the credential’s advice standard squares with a dually registered firm.
The Financial Planning Association introduced a national membership program to more than 8,000 independent advisors affiliated with Ameriprise. The initiative includes a group discount on FPA dues and a dues payroll deduction program to make it easier for Ameriprise advisors to join FPA and renew their membership, the FPA said.
“Ameriprise Financial is one of the largest and most trusted names in financial services, with thousands of financial advisors who believe in and are committed to the financial planning process,” FPA CEO Patrick D. Mahoney said in a statement. “Together with Ameriprise, we can further support the development of Ameriprise advisors with financial planning education, business support and important networking through our national network of local FPA chapters.”
This is the first membership program FPA has established with a major financial firm, FPA spokesperson Ben Lewis said.
Ameriprise is dually registered as an investment advisory firm and a brokerage. Its advisors can serve clients as both investment advisors and brokers. The advice standard for advisors is fiduciary duty, while brokers are governed by Regulation Best Interest, the broker standard that the Securities and Exchange Commission put into force in 2020.
In 2020, the CFP Board of Standards Inc. expanded the fiduciary duty attached to the CFP mark by making it apply to all aspects of providing financial advice, not just when a CFP is doing financial planning.
That raises the question at Ameriprise that crops up at other brokerages where financial advisors hold the CFP credential. Are they adhering to fiduciary duty — as the CFP requires — or to Reg BI when working with clients? Or some of both?
“It’s the kind of thing that disappoints me but doesn’t surprise me,” said Knut Rostad, president of the Institute for the Fiduciary Standard.
Rostad asserts fiduciary fee-only advisors are best for clients. He uses fee transparency as an example. He criticized Ameriprise for the lengthy section in its Form ADV that outlines its fee structure.
“Ameriprise takes 15 pages to explain how they get paid,” Rostad said. “It’s a problem because it obfuscates to investors what they pay for their service. Fiduciary advisors aren’t angelic. But they are more transparent, clear and simple about what their clients pay.”
The advice standard for Ameriprise advisors depends on the circumstances.
“In an advisory relationship, our advisors act as fiduciaries while providing investment advice in a financial planning or advisory account relationship,” Ali Mueller, Ameriprise vice president for corporate communications, wrote in an email. “In a brokerage relationship, our advisors make investment recommendations that are in the client’s best interest. We also have approximately 4,000 CFPs who are subject to the standards set by the CFP Board.”
Mueller defended Ameriprise’s fee disclosures, saying that they’re similar in length to those of other financial services firms that are part of a larger organization and have many affiliates.
The CFP Board said approximately 60,000 CFP professionals work at broker-dealer firms. The organization sets and enforces the competency and ethical standards for the designation, which is held by approximately 97,500 U.S. financial advisors.
The CFP’s fiduciary standard overrides other standards, according to the CFP Board.
“Under CFP Board’s Code of Ethics and Standards of Conduct, a CFP professional makes a commitment to CFP Board, as part of their certification, to act as a fiduciary, and therefore act in the best interests of the client, at all times when providing financial advice to the client,” CFP Board general counsel Leo Rydzewski said in a statement through a CFP Board spokesperson. “A CFP professional has this obligation in circumstances when applicable law, rule or regulation applies a different or lower standard, such as the standard set forth in Regulation Best Interest.”
The FPA is not sure how many Ameriprise advisors will join the organization, which currently has 17,600 members.
“We are expecting to attract some new members through this program, but because this is a new venture for us, we are going into it without a set expectation,” Lewis wrote in an email. “With that said, our overall goal is to support the professional development of financial planners while helping them realize their vision of success through the programs and services we offer.”
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