Thoughts on Disclosure and Continuing Education

Boone, Norman M.
August 1998
Journal of Financial Planning;Aug1998, Vol. 11 Issue 4, p20
Academic Journal
This article presents the author's opinion on the disclosure and continuing education issues in the U.S. financial planning environment. Congressman John Dingell (D-Mich.) proposed an amendment to the Financial Services Act that would require disclosure of commissions, fees, markups, or other costs incurred by customers in the acquisition of financial products. Fee-only advocates have expressed support for Dingell's and other disclosure bills, in part because they expect them to result in a more level playing field. This assumption is often made in reference to the selling technique of some brokers who unfairly hide the full cost of their financial products. By hiding the costs, brokers can theoretically make their services appear more attractive than those offered by the fee-advisors who disclose the projected costs. To have a truly fair approach to disclosing costs, we need to show projected costs over the life of a client relationship. Yes, I believe there are advantages to working with a fee-based advisor, and yes, some of the assumptions I have used may not always apply. But my point is, if we are seeking a level playing field, to be fair and completely honest we need to try to find a way to disclose costs of service over more than just the first year. The current standard for Certified Financial Planner licensees call for 30 hours of continuing education every two years, including two hours of ethics. I would like to see the standard increased to the equivalent of 40 hours a year, but with the caveat that what is permitted should be more flexible.


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