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

DATE: MONDAY, April 1, 1991                   TAG: 9103300060
SECTION: BUSINESS                    PAGE: B-5   EDITION: METRO 
SOURCE: Newsday
DATELINE:                                 LENGTH: Medium

GROUPS URGE COMMISSION DISCLOSURE

Financial planners are being challenged by two industry organizations to disclose to their clients how much they receive in commissions and fees for the stocks, bonds, mutual funds and insurance policies they select.

Planners are supposed to tell clients which of the four methods of compensation they use, but they almost never disclose the actual dollar amount of commissions unless asked, and they rarely are.

"We have to make our standards more definitive if we are going to be truly professional," said John Blankinship, a California planner and chairman of the International Board of Standards and Practices for Certified Financial Planners committee that is circulating the proposed standards to the group's 20,000 members.

At the same time, the National Association of Personal Financial Advisors - the trade group for planners who receive only fees from clients, not commissions on the investments and policies they select for them - is circulating its own disclosure proposal and form to all financial planning organizations for study.

Getting anything approved by members is a long process and by no means assured. Blankinship said that after meetings with planning groups around the country, the standards may be redrafted. There have been some unsuccessful congressional efforts to regulate planners in recent years, but just how the planners would be regulated and by whom is unclear.

Barbara Roper, a legislative analyst for the Consumer Federation of America, said that she was not sure planners would be in favor of a strong proposal to disclose commissions.

But even if the industry were to adopt tough standards, she pointed out - and Blankinship agreed - it would not be enforceable because there would be no legal requirement for planners to disclose the information.

A lot of planners, while agreeing in principle that disclosure is right and professional, aren't really happy about it. "All people have the right to know how much something cost them," said Jon Ten Haagen, chairman of the Long Island, N.Y., chapter of the International Association of Financial Planners. "But if you go into a supermarket to buy a quart of milk, the supermarket doesn't tell you how much they make from each milk company."

There are four basic methods of compensation for planners:

Fee only, which means that they are paid for devising a plan, plus a fee for managing the money if the client wants that service.

Fee plus commission, which means a smaller fee, but commissions for various financial products.

Commission only.

Fee offset, with commissions credited against the fee and any excess going to the client.

by CNB