Serving As a Unified Voice for the Financial Planning Profession. September 17 and 18, FPA of Florida Makes 11th Trip to Tallahassee

Transcription

1 Serving As a Unified Voice for the Financial Planning Profession September 17 and 18, 2012 FPA of Florida Makes 11th Trip to Tallahassee Representatives from the FPA of Florida in attendance: Paul Miller, CFP Indian River Financial Group, Inc. Ft. Lauderdale FPA of Greater Fort Lauderdale Kimberly Overman, CFP The Financial Well, Inc. Tampa FPA of Tampa Bay Claudia Sachs, CFP First Florida Investment Services Tallahassee FPA of Gulf States Michael Zmistowski, RFC Financial Planning Advisors, LLC Tampa/St. Pete FPA of Tampa Bay Rich Martin, CFP JHS Capital Advisors Palm Harbor FPA of Tampa Bay Tim Allen, CMB Genworth Financial Naples FPA of Southwest Florida Charlie Fitzgerald, III, CFP Moisand Fitzgerald Tamayo, LLC Maitland FPA of Central Florida

2 Monday Dinner with lobbyists Lisa Miller and Meghan Kelly of Lisa Miller and Associates FPA members have met with Lisa Miller on numerous occasions over the last several years. She has been generous with her time and has provided us many helpful insights and introductions. Tuesday 8:45 AM Resolution for Financial Planning Week 2012 Thanks to Florida s CFO Jeff Atwater, the FPA of Florida received a Cabinet-wide Resolution declaring October 1-7, 2012 as Financial Planning Week. FPA members pictured with Chief Financial Officer Jeff Atwater (Center) From L to R, Tim Allen, Charlie Fitzgerald, III, Michael Zmistowski, Rich Martin, Claudia Sachs, Kimberly Overman and Paul Miller This is the 7 th consecutive year the FPA of Florida has received a resolution for Financial Planning Week. Our first sponsor was Governor Jeb Bush, the next four years were sponsored by CFO Alex Sink and, for the past two years, our resolution has been sponsored by CFO Jeff Atwater.

3 Members attended a portion of the Cabinet meeting and listened to a report provided by the Office of Financial Regulation, Interim Commissioner, Linda Charity. After the cabinet meeting, Charlie Fitzgerald talked briefly with Associate Deputy Attorney General, Kent Perez, Esq. We talked about the prospect of state licensure of financial planning and about the two standards of care that exist today with regards to securities and investment advice: suitability and fiduciary. Tuesday 10:00 AM Meeting with Insurance Consumer Advocate for Florida, Robin Westcott We discussed the following items: Legislative agenda for 2013 Citizens Property Insurance Corporation House Bill 1065, which was reworked by the Department of Financial Services and the Insurance Lobby to keep Florida s Safeguard our Seniors legislation in force. HB 1065 made it through Florida s House of Representatives but stalled in the Senate during the closing days of session. This legislation is expected to be picked up again next spring. The financial planning process and her personal experiences with regards to financial planning advice. The prospect for licensure of financial planners, whether at a federal or state level. The results of our recent study of barred and revoked registered representatives in Florida. We found there were 81 FINRA registered representatives (stock brokers) that have been barred or revoked since the January 1, Since then, 36 of these individuals held state licenses to sell insurance and 14 of them currently hold active appointments under one or more insurance companies. We have four items for follow-up: o Offer suggestions to improve the CFO s Your Money Matters website.

4 o Offer on-site financial planning training and education to DFS staff members. o Communicate during the next legislative session regarding HB o Possibly have Robin speak to any of our local FPA chapters. Tuesday Lunch at Andrew Capitol Grill FPA Members met for the first time with: Sam Miller, Executive VP, Florida Insurance Council (FIC) Curt Leonard, Regional VP, State Relations, American Council of Life Insurers (ACLI) We discussed: Events surrounding the introduction and amendments for HB 1065 (changes of Florida laws regarding Sales of Annuities) and the potential effect on Safeguard Our Seniors (SOS) National Association of Insurance Commissioners (NAIC) model act regarding Viaticals Stranger Originated Life Insurance Both Sam and Curt defended their position that the perceived attempt to change SOS legislation in the spring of 2012 was actually the insurance lobby s attempt to accomplish two things: (1) bring Florida laws regarding the Sales of Annuities in line with NAIC model legislation (23 other states have adopted this model legislation) (2) broaden annuity sales abuse protections afforded to seniors through SOS to all Florida citizens. Sam and Curt said the Insurance Lobby will advocate for a new version of HB 1065 in the 2013 spring session which should encompass the same language but will be assigned a new number. The FPA of Florida supported the final version of HB 1065 that was approved by the House. It preserved the SOS Act and extended new protections for all Florida citizens. Safeguard Our Seniors has significantly decreased annuity sales abuses. We are hearing reports of increased insurance agent education by insurance companies. In addition, the Department of Financial Services is reporting fewer annuity sales complaints and is using its new authority to take disciplinary actions against insurance agents who have been disciplined by other financial regulation agencies, e.g., FINRA. We talked briefly about the Viatical and Life Settlement industry and agree there is an important place for the sale of existing life insurance policies to third parties. However, when the intent of a life insurance purchase is to sell the policy to a buyer for profit, then we believe this undermines the intent of life insurance. Profiting through the securitization of life insurance, which is the linchpin of Stranger Originated Life Insurance (STOLI), drives up premium costs for citizens who are purchasing life insurance to protect their family, loved ones and those who have a real insurable interest. The FPA of Florida will oppose any attempt to relax or change laws in Florida to open the way for STOLI. We appreciated Sam and Curt taking the time to meet with us and we look forward to working with them and others who advocate for this important industry.

5 Tuesday 1:30 PM Meeting with CFO s office and the Department of Financial Services (DFS) Back row L to R, Rich Martin, Paul Miller, Tim Allen, Claudia Sachs, Kimberly Overman, Tasha Carter, Greg Thomas, Michael Zmistowski, Front row L-R, Charlie Fitzgerald, Tami Torres FPA of Florida Delegates met with: Tami Torres, Deputy CFO Tasha Carter, Division Director, Consumer Services Greg Thomas, Director of Agent and Agencies Services We discussed the following: Tasha Carter s role in overseeing the DFS s Consumer Services Hotline o Approx. 60 employees are covering 300,000 calls per year. o Many of the calls lately are from citizens regarding insurance needs and the majority of those are pertaining to homeowners insurance. Offered input from our own review of the CFO s Your Money Matters website. We feel the website is helpful, but could be improved by adding more financial planning ideas, topics and pointers. Greg Thomas shared the following: o Reports and complaints of sales abuse regarding annuities seem to be on the decline. He also reported training in the industry regarding proper annuity sales practices is on the rise. o For the fiscal year ending July 31, 2012, the DFS conducted 2,535 insurance agent investigations. Of these investigations, 469 individuals were formally disciplined. If administrative violations, such as continuing education infractions, are included then the number of disciplines increases to 44,337. o As of July 31, 2012, the DFS had 732 open investigations.

6 o Since January 1, 2011, which was the inception date for the Safeguard Our Seniors Act, the DFS has used its new authority granted by the Act to issue 15 orders against Florida licensed insurance agents. These actions are classified as reciprocal actions, where the DFS can now act on the findings of other financial regulatory agencies without having to start their own investigation on certain insurance agents from square one. Mr. Thomas told us there were presently 15 more agents under investigation where the DFS is using its new reciprocal agency authorities. These details are confidential until the state takes action and issues an order. o There are 550,000 licensed insurance agents doing business in Florida, nearly one for every 50 Florida citizens. Nearly one-half of these agents hold multiple licenses. Most common are agents who hold a Life, Health license along a Property and Casualty license. Only one-half are actually domiciled in Florida. o There were approximately 110,000 applications for new licenses in the last year and at the same time, there were approximately 90,000 who dropped their licenses. This is a very large turnover. o We talked about the value of NAIC model legislation for the Sales of Annuities and the DFS defended their position for adding extra restrictions for Florida to this model legislation. While it makes sense to develop common language that all states can adopt, sometimes to get agreement between so many states, the standards tend to be lower in order to get maximum agreement. It is my opinion that the DFS views model legislation as a starting point. For those states wanting to provide added protection, it is their prerogative to enhance legislation beyond the so called least common denominator. We shared our own independent study where we determined there were 81 Florida registered representatives (stock brokers) who have had their licenses revoked by FINRA since January 1, Of those, 36 were licensed to sell insurance in Florida and 14 of those were actively appointed. If our numbers are correct, Florida is averaging about one registered representative being barred from FINRA for some serious infraction every week. We talked about House Bill 1065 and relayed to Greg Thomas our information that the insurance lobbyists will attempt to get this bill passed in the next legislative session. We discussed the 6 steps of the financial planning process. We have several items for follow-up: o Offer on-site financial planning training and education to DFS staff members Michael Zmistowski specifically offered to provide this training at no cost. o We would keep in communication during next legislative session regarding the new HB o We determined that Tami is interested to speak to any of our local FPA chapters.

7 FPA members meeting with representatives from the DFS Tuesday 3:00 PM Meeting with CFO s office and the Department of Financial Services (DFS) Back row L to R, Paul Miller, Robert Kynoch, Kimberly Overman, Tim Allen, Claudia Sachs, Greg Hila, Rich Martin; Front Row L to R: Linda Charity, Alisa Goldberg, Pam Epting, Charlie Fitzgerald, Michael Zmistowski

8 FPA of Florida Delegates met members of the Office of Financial Regulation: Linda Charity, Interim Commissioner Greg Hila, Deputy Commissioner Pam Epting, Director, Division of Securities Robert Kynoch, Chief, Bureau of Enforcement Alisa Goldberg, Chief, Bureau of Registration Discussed the following items: Learned that the OFR supervises 285,000 Registered Representatives and Investment Advisors in Florida. Of these, 40,000 are domiciled in Florida. With the Dodd Frank Act and the new $100M assets under management threshold for state supervision versus federal supervision, the state of Florida picked up responsibility for an additional 350 registered investment advisors who were previously regulated by the Securities and Exchange Commission (SEC). This was less than originally expected. Discussed the loss of momentum for the Spencer Bachus bill, which would open the way for a Self-Regulatory Organization (SRO), likely FINRA, to supervise Investment Advisors. It appears Congresswoman Maxine Waters recent proposal is gaining momentum. Her proposal would retain the SEC as regulator for Investment Advisors with greater than $100M in assets under management and provide for additional funding to step up more active supervision of advisors. From the recent North American Securities Administrators Association (NASAA) conference, it doesn t appear anything major is coming up-- there is a measure of wait and see considering the upcoming general elections. State regulators are working to improve their Desk Audit Program, an audit for state investment advisors that doesn t require an on-site visit by the OFR. These audits will be directed more toward investment advisors with low risk profiles. In particular, advisors who do not custody client assets and investments. Members of the OFR are waiting on the announcement of the new OFR Commissioner, which will likely be made at the Florida Cabinet meeting on Tuesday, October 9th. There is an effort to speed up the application process for new registered investment advisors and registered representatives by permitting Live Scan Electronic Fingerprinting. This should save 7-10 days of processing time. Currently, Florida requires $2,500 in net capital for all state registered investment advisors. We questioned the importance of this rule, since the SEC doesn t have such a rule for SEC regulated investment advisors. We heard a rumor there has been discussions to introduce an independent SRO at the state level to assume some of the State s regulatory duties. The members of the OFR had not heard this. The FPA would likely oppose a move in this direction, the same way the FPA opposes an SRO at the federal level for Registered Investment Advisors. In an effort to detect improper or suspicious investment related activities of registered representatives or investment advisors, the OFR has created a form that can be submitted anonymously: This form can be found on Office of Financial Regulation s website. This report is submitted by Charlie Fitzgerald, III, President