NEW YORK - A TRIO of US financial planning organisations is forging an alliance, joining the list of industry groups hoping to influence what likely will be tighter governmental oversight of the financial services sector.

The question is whether the three groups, historically at odds with each other, will be able to bury the hatchet long enough to influence an expected massive overhaul of financial regulation by Democrats in Congress and the White House.

Financial planning is not regulated as a stand-alone profession. Instead, it is monitored indirectly through licenses held by investment advisers, securities brokers and insurance producers or consultants.

'Currently, the regulation of people who give investment advice at any level is dysfunctional and disjointed,' said Ms Diahann Lassuf, national chairwoman of the National Association of Personal Financial Advisors (NAPFA) in an interview.

'The industry is not good about having a blanket standard of care for the investor or consumer,' she said. 'We want to be part of that conversation and not have to simply react.'

US President-elect Barack Obama said earlier this month that he would put strong financial regulation at the center of his economic recovery programme, the latest sign of a looming crackdown expected to focus on regulatory failures behind the worst US economic crisis in decades.

Just in the past week, the alleged US$50 billion Ponzi scheme by well-connected Wall Street trader Bernard Madoff has raised further accusations that regulators in the Bush administration were asleep at the switch.

Leaders from Ms Lassuf's organisation, the Financial Planning Association (FPA) and the Certified Financial Planner Board of Standards Inc (CFP) met at FPA headquarters in Washington on Dec 3.

But some industry observers are sceptical that the groups - each with a distinct philosophy about how the financial advice business should be regulated - will be able to set aside their differences long enough to influence how the new administration views financial planning.

'Bitter enemies'

NAPFA believes that advisers should be compensated only through fees, which are paid out independently of performance, while the FPA embraces advisers' accepting commissions, which, the group thinks can lead to conflict of interest problems.

Nobody expects that finding common ground among these groups will be easy.

'Can fee-only planners and commission brokers exist on the same side of the field when for so long they have been at each other's throats?,' said Mr Louis Harvey, president of Dalbar Inc, a Boston-based financial services market research firm.

The CFP Board, for example, has had a few minor skirmishes with NAPFA in recent years over the former's code of ethics that requires those with CFP accreditation to act on a fee-only basis when doing financial planning. NAPFA wanted that standard applied to all CFPs at all times.

Representatives of the three acknowledge that seeing blanket regulation in addition to finding common ground will not be easy.

'We have no choice,' said Mr Duane Thompson, managing director of the FPA's Washington office.

'If the financial planning organisations don't get involved, someone else is going to do it for us. We don't want to see those groups who may have agendas that don't align with financial planning groups with greater access.'

Vying to be heard
The three organisations are not the only ones vying to make their voices heard right now in Washington.

The Financial Services Institute Inc of Atlanta, an advocacy group that speaks for independent broker/dealers and advisers, has been meeting with congressional leaders.

'This needs to be done right, not fast, said Mr David Bellaire, the group's general counsel and director of government affairs. 'If an investor needs to file a complaint, they have to know there is a single regulatory body to go to, not the alphabet soup we have now.' The Securities Industry and Financial Markets Association (SIFMA) of New York and Washington also intends to make itself heard on any advice-related regulation.

'SIFMA shares views with those groups, and I think we are all interested in preserving investor choice but we do not want a one-size fits all type of regulatory structure,' said Ms Ira Hammerman, the group's general counsel.

So far, congressional leaders and leading economists have talked about systemic financial industry reform.

Mr Dean Baker, chief economist at the Centre for Economic and Policy Research, looks to do away with rampant conflict of interest found throughout the financial sector.

'We don't want an industry which is ripe with conflict, and that engages in all sorts of exotic financial speculation,' he said. 'For example, there needs to be a thick wall between bond issuers and the bodies that declare their worth.

So far, nary a word has been heard about sweeping financial adviser regulation.

'Sure, the incoming congress and presidential administration have to worry about regulation of the financial industry as a whole,' said Mr Thompson, 'but we hope they will drill down to us in the not so distant future.' -- REUTERS