Goal is to give investors more voice

Memo from certified financial planners to corporate and regulatory boards: Slide over and make room for us.

The Certified Financial Planner Board of Standards in Denver plans to ask securities regulators to consider putting a planner on a board to oversee the accounting industry, and it also wants to get CFPs on corporate boards.

The effort comes as lawmakers sift through bills intended to keep a closer eye on the accounting industry and as regulators consider rules to force better corporate governance.

Last week, Chicago auditor Arthur Andersen LLP went on trial in Houston on charges of obstructing justice by shredding Enron Corp. documents.

Planners say the Enron disaster highlights the need to push for representation on pertinent boards.

“Financial planners are the ones who are most aligned with investors,” says Patricia Houlihan, former chairman of the CFP Board. “It makes a lot of sense to bring that voice to the table.”

Deflecting criticism

Senate Banking Committee Chairman Sen. Paul Sarbanes, D-Md., is expected to introduce a bill soon that would create an independent board at the Securities and Exchange Commission to oversee the accounting industry.

Last month, the House passed a bill sponsored by Financial Services Committee Chairman Michael Oxley, R-Ohio, that would create such a board. Additionally, the SEC has the authority to create a board without legislation, says Michael Herndon, government affairs director for the CFP Board.

Considering SEC Chairman Harvey Pitt’s past ties to the accounting industry, some critics contend that putting the SEC in charge of that industry’s oversight is a poor idea.

While in private law practice, Mr. Pitt’s clients included big accounting and Wall Street firms, and last week he had to deflect criticism for meeting privately with one of the Big Five accounting firms.

Despite renewed concerns about Mr. Pitt’s independence, Mr. Herndon says he doubts that Congress would back off plans for SEC oversight of the industry.

“I think this board will be designed with the big picture in mind, and not just how it fits into Mr. Pitt’s term,” says Mr. Herndon. “A board would have to work no matter who the chairman is.”

Mr. Herndon says the CFP Board’s request to the SEC for inclusion of planners on an oversight board will be made within the next few weeks.

Voice needed

Many planners laud the move.

“It’s a perfect fit. Our [CFP] certification brought us through a wide range of topics,” says John Henry McDonald, a CFP and president of Austin (Texas) Asset Management Co. “We’re in the same [general industry] as accounting folks, but we’re a different creature.”

The Financial Planning Association has not approached the SEC about putting a planner on the board, but a spokeswoman says the group supports any appropriate participation by CFPs.

At the same time, CFPs who serve on various boards see the benefit of having their peers do the same.

“Shareholders need a voice on the board,” says Randy Waesche, a CFP and president of Resource Management Inc. in New Orleans.

“I think that’s been lost, and Enron is a great example of that,” says Mr. Waesche, who sits on five boards of privately held companies and one non-profit group.

“I think the consumer benefits from anybody who recognizes that their fiduciary responsibility is to the shareholders and not the other board members and management,” he says.

But, caution Mr. Waesche and others, a CFP designation alone doesn’t make a person qualified to serve on a board.

“If you’ve thought about what is best for the investor, time and time again, that bias can serve itself well on a board of directors,” says Mr. McDonald.

“But marks don’t mean a damn thing. You have to be a fiduciary,” says Mr. McDonald, who serves as an independent director on the board of the $30 million Texas Capital Value & Growth Fund, offered by First Austin Capital Management Inc.

Ms. Houlihan says that during her tenure as chairman of the CFP Board, the group was pushing to get CFP representation in places where it mattered for consumers.

“Once people understood that we weren’t lobbying for benefits for CFPs, but rather for benefits for consumers, it became easier,” she says. “That’s what you’re seeing being continued.”

The SEC recently asked Ms. Houlihan to serve as a panelist at an SEC investor summit, which was held Friday.

“I was thrilled that they even thought of [me],” she says. “This is a huge step.”