Decade of Distinction: Celebrating 10 Years of Regulatory Standards in Financial Planning

Ten years ago, financial planning reached a milestone when the American Institute of CPAs issued the first regulatorily enforceable financial planning standards. Today, the Statement on Standards in Personal Financial Planning Services (SSPFPS) remains the only regulation specific to financial planning practice. This 10th anniversary provides a chance to reflect on this revolutionary establishment of financial planning as a profession.

Alignment with the public interest and consumer protection are hallmarks of a profession. Therefore, regulatory enforcement is crucial for enabling consumers to seek justice from a regulator at no cost. This is significant because arbitration clauses often restrict financial planning consumers' rights. Moreover, if consumers seek compensation through legal action, the SSPFPS can serve as the professional standard of care — unlike credentialing standards that aren’t intended as a basis for civil liability, and which can be compared to a code of conduct enforceable on the members of a private club by the club only.

How did such an achievement, defining financial planning as a profession, come to be? The answer might surprise you.

The SSPFPS emerged from the accounting profession, following its long-established alignment with consumers' best interests and protection. Unlike financial planning evolving from the investment and insurance industry as a consultative sales approach, financial guidance from CPAs was historically a stand-alone advisory function. Until the Federal Trade Commission forced a change in the 1990s, CPAs were restricted from receiving commissions because of their inherent conflict of interest. Overall, the conflicts often found in investment-driven financial planning didn’t impede CPA financial planning from developing with consistent alignment with clients' best interests.