Financial Planning Regulation: Who Oversees Financial Planners?

While financial planning is not regulated by any single entity, individual planners may be subject to compliance or regulatory standards set by different agencies, based on their scope of business. For example, a Certified Financial Planner™ (CFP®) must adhere to financial planning and ethical standards established by the CFP Board. Regulation of financial planners differs from regulation of registered investment advisors, which is handled by the Securities and Exchange Commission (SEC) and/or state agencies.

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About Financial Planning Regulation

Understanding how financial planning is regulated starts with what financial planners do. The SEC describes a financial planner as someone who develops plans to help clients meet their financial goals. Some planners also hold professional credentials, such as CFP® certification or the Chartered Financial Consultant (ChFC) designation.

Financial planning regulation is determined largely by the scope of services a financial planner provides:

Type of Financial Planning Professional	Regulatory or Administering Body	What Is Regulated
Certified Financial Planner™ (CFP®)	CFP Board	Adherence to the CFP Board’s Code of Ethics and Standards of Conduct
Chartered Financial Consultant (ChFC)	American College of Financial Services	Adherence to the American College’s Code of Ethics and Procedures
Insurance agent	State departments of insurance	Licensing, testing, continuing education; states also investigate consumer complaints and enforce disciplinary actions when necessary.
Certified Public Accountant (CPA)	State Boards of Accountancy	Licensing, continuing education, ethics and professionalism; states also investigate consumer complaints and enforce disciplinary actions when necessary
Chartered Financial Analyst (CFA)	CFA Institute	Adherence to the CFA Institute’s professional and ethical standards

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Financial Planning Regulation vs. Financial Advisor Regulation

The terms “financial planner” and “financial advisor” are often used interchangeably, but the distinction between them matters when discussing regulation. Registered investment advisors (RIAs), specifically, are regulated by the SEC and/or state regulatory agencies. An RIA is an individual advisor or an advisory firm that provides securities advice to clients in exchange for a fee.

Is a financial planner subject to SEC regulatory rules? Yes, if they’re also registered with the SEC as an investment advisor. Here’s what’s required of financial planners in those scenarios:

Maintain accurate records for the business, including client communications and financial records
Submit an initial Form ADV at registration and file annual Form ADV updates
Establish, enforce and maintain a written code of ethics
Adhere to the SEC’s marketing rule, which specifies what advisors can and cannot say in their marketing materials
Establish, enforce and maintain written compliance policies, including adherence to SEC cybersecurity rules
Use a qualified RIA custodian to maintain client funds and securities
Adhere to a fiduciary standard and act in clients’ best interests at all times
Properly disclose conflicts of interest or disciplinary sanctions

Investment advisors are required to register with the SEC when assets under management exceed $110 million. Advisors with AUM between $100 million and $110 million may choose to register with the SEC or at the state level. Advisors with AUM below this threshold register with the state and are subject to state regulatory rules.

FINRA Regulation of Financial Planners

The Financial Industry Regulatory Authority (FINRA) regulates its member broker-dealers, which buy and sell securities on behalf of customers, for their own accounts or both. Most broker-dealers must register with the SEC and join a self-regulatory organization (SRO), such as FINRA.

FINRA carries out its oversight responsibilities by:

Writing and enforcing rules that are applicable to the ethical activities of registered brokers and broker-dealers
Examining registered firms for compliance
Fostering transparency in the markets
Educating investors

Financial planners who are registered representatives of broker-dealers are subject to FINRA regulations. SEC regulatory standards also apply to financial planners who hold dual registration as both broker-dealers and RIAs.

FINRA enforces its own rules as well as rules established by the Municipal Securities Rulemaking Board (MSRB). Similar to the SEC, FINRA has the authority to impose sanctions against brokers and broker-dealers that are found to be non-compliant. That can include assessing fines and barring offenders from FINRA outright.

Financial Planning Regulation at the State Level

State regulatory bodies can establish their own rules and guidelines for regulating registered investment advisors, in accordance with the rules set under the Investment Advisers Act of 1940. For instance, smaller firms that are seeking to conduct investment advisory business in New York State must still file Form ADV through IARD. They must also meet other licensing requirements in order to do business with clients.

Financial planners who are not registered as investment advisors should still be aware of what state regulatory rules, if any, may apply to their businesses. For example, if you’d like to expand your services by obtaining an insurance license, you’ll generally need to meet exam requirements, pay the necessary fees and complete continuing education requirements if mandated by state law.

Frequently Asked Questions (FAQs)

What Is the Difference Between a CFP® and a Financial Planner?

A CFP® is a financial planner who meets education, experience, exam and ethics requirements established by the CFP Board. This certification is considered to be the gold standard for the financial planning profession. You do not need a CFP® credential to be a financial planner, but you cannot market yourself as a CFP® professional if you haven’t completed the certification requirements.

Are Financial Planners Fiduciaries?

Fiduciaries must act in their clients’ best interests at all times. Financial planners are fiduciaries if they are registered investment advisors or CFP® professionals. Other types of financial planners, including those registered as broker-dealers, are held to a Regulation Best Interest (Reg BI) ethical standard.

Can Financial Planners Be Fined by the SEC?

Financial planners who are registered with the SEC to act as investment advisors can be subject to fines and other enforcement actions if they violate regulatory guidelines. For example, breaching fiduciary duty could result in censure, fines and/or the revocation of your registration status. Their brand reputation could also suffer, potentially costing them clients and business.

Bottom Line

As a financial planner or advisor, your clients trust you to help them reach their goals. Suppose you’re interested in pursuing a career in the financial services industry. In that case, it’s important to first understand when and where you need to register and what regulations you might be subject to. This can help you stay compliant as you navigate the process for establishing a new advisory firm.

Tips for Growing Your Advisory Business

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