XY Planning Network Takes Fiduciary Fight To States And Hires Advocacy Consultant Duane Thompson

BOZEMAN, Mont., Oct. 12, 2020 /PRNewswire/ — XY Planning Network (XYPN), a membership organization comprised of more than 1,300 independent fee-for-service financial advisors, today announced that it will not appeal its unfavorable 2nd Circuit ruling on Regulation Best Interest, but it has engaged Duane Thompson, president and founder of Potomac Strategies LLC, an experienced industry lobbyist and fiduciary advocate, to continue its fiduciary fight at the state level. Thompson will assist XYPN in its state advocacy efforts for a fiduciary standard for all financial advice, and that the fee-for-service business model XYPN pioneered be regulated in a manner consistent with other (e.g., assets under management) fee models.

In September 2019, XY Planning Network (XYPN) co-founders Alan Moore and Michael Kitces made waves when they announced their decision to file a lawsuit against the SEC challenging the Regulation Best Interest (Reg BI) rule during the opening of their annual national conference, #XYPNLIVE. Thereafter, a 9-month legal battle to vacate the new broker advice standard ensued, with the U.S. Court of Appeals for the 2nd Circuit ultimately ruling against XYPN on June 26, 2020, acknowledging that Regulation Best Interest would “put [XYPN] and other investment advisers at a competitive disadvantage compared to the status quo.” However, the three-judge panel decided nonetheless that the SEC had the regulatory authority to impose a lower standard for brokerage firms, creating an unfavorable outcome for RIAs. 

The big question since has been, “What’s next?” Today, Moore and Kitces finally revealed their answer as they opened XYPN’s 2020 conference with the announcement they’ve hired Thompson, who was the architect of the FPA’s successful lawsuit against the SEC’s since-vacated non-fiduciary broker-dealer exemption (more widely known as the “Merrill Lynch Rule”). He has a decades-long career in financial planning advocacy punctuated by many successes.

When the Court’s decision to uphold Reg BI was announced, XYPN leadership vowed continued support and advocacy for distinguishing between the product distribution and capital formation function of brokers, from advisors who are in the business of advice and who owe a fiduciary

duty to their clients. In recent years, a growing number of states have also recognized the SEC’s failing with Regulation Best Interest’s insufficient standard of advice for brokers and insurance agents, including Massachusetts, Nevada, New Jersey, and others. Many of those states not only fought alongside XYPN in challenging Regulation Best Interest but have also been enacting their own state-based fiduciary duties that uniformly apply a fiduciary duty for both investment advisers and brokers providing advice in their states. It’s not surprising, then, that following XYPN’s loss against the SEC, the states naturally became the new battleground for fiduciary advice. 

“As a membership organization with more than 1,300 advisors and RIAs in all 50 states, we recognize the challenges of uniformity in state fiduciary rulemaking,” said XYPN co-founder Michael Kitces. “Nonetheless, with the firms that manufacture and distribute products blocking effective Federal regulation, we believe the states represent the best path to advance fiduciary regulation of advice. Ultimately, XYPN feels a duty to protect not just the RIA community, but the consumers that community serves. With Thompson’s contributions, our fight to hold advisors delivering financial advice to the highest standard of care for their clients continues.”

About XY Planning Network  XY Planning Network is the leading financial planning platform for fee-for-service financial advisors who want to serve Gen X and Gen Y clients, providing comprehensive financial planning services for a monthly subscription fee and without product sales or asset minimums. The Network offers a virtual community for new and established financial advisors who want to serve a younger clientele, and provides its members compliance support services, marketing support, business tools and templates, and a wide range of technology solutions.

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