
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 9, 1991                   TAG: 9103110280
SECTION: EDITORIAL                    PAGE: A/11   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

GETTING TOUGH WITH FINANCIAL HUSTLERS

FACED with complicated investment options, people are increasingly seeking expert help to manage their money and meet their financial goals. As a result, "financial planning" has become a growth industry. Today, as many as 500,000 Americans call themselves "financial planners."

But as the number of reputable financial planners has rapidly grown, so has the number of pretenders. Every year, says the Consumer Federation of America, investors are bilked out of at least $1 billion.

Virginia is among several states that have moved in recent years to strengthen regulations on selling money-management advice and services. Even so, says 9th District Congressman Rick Boucher, stronger control is needed at the federal level.

Boucher has introduced a bill to supplant a patchwork of state and local legislation. It would require financial planners to register with the Securities and Exchange Commission, prohibit misrepresentation of a planner's qualifications, and require written disclosure of how planners are compensated.

Now, Boucher says, many planners "self-deal" without their customers' being the wiser: Under the guise of giving objective financial advice, they push investment options on which they stand to earn big commissions. It's not illegal, but it's a conflict of interest that should be disclosed.

The Virginia Democrat's legislation would also make it easier for customers to sue a planner for damages if fraud is suspected. "Some unscrupulous practitioners gain custody over their customers' funds and, through `churning' of the accounts, exhaust the funds. . . . Others simply steal the money," Boucher says.

Concerned that scam artists are giving the entire industry a bad name, major organizations of financial planners support Boucher's call for federal regulation. So does the North American Securities Administrators Association, the umbrella group for state regulators.

But because financial planning overlaps with the work of many tax accountants, insurance agents, stockbrokers and lawyers, several professional groups argue that Boucher's bill would bring unnecessarily burdensome regulation to their specialties. Still, as Barbara Roper of the Consumer Federation says, the assurance that all who call themselves financial planners are playing by the same standards "is the minimum needed to protect consumers."

No act of Congress can guarantee that every investment dollar will turn a profit. But Boucher's bill would make it tougher for charlatans to pose as reputable financial planners, and should be passed.

by CNB