US to hand over control of CFP

America’s Certified Financial Planner (CFP) board is planning to relinquish some of its control to a new ruling world board, leaving the final say on global CFP matters to the new multi-national body.

Chair of both the CFP board and the International CFP Council Patricia Houlihan says the change of power, which would see the new board become the key decision maker in all global CFP matters, could be made as soon as January 2003.

Houlihan says the US will retain some authority on the new board, with a delegation from the current US-based board set to represent America on the new board.

It is expected that the current CFP board of Governors will set up a transition task force by the end of this year to help the shift to the new board. The current CFP board is also expected to remain, however, its jurisdiction will extend only to domestic US issues.

At this stage it is believed the new global body is yet to establish its board membership. To create such a board, each member country will be asked to send two delegates to the current CFP board’s semi-annual meetings.

It is Houlihan’s view that as the number of CFP member countries has grown considerably in the past few years, a new global board would be more efficient.

She says the number of participating countries would increase once the CFP designation is viewed as an international mark, not as the US mark, as it is often perceived as being.

At present, the Denver-based non-profit association reserves the decision making power for all domestic and international issues involving the CFP designation.

In 1990, Australia became the first country to join the International CFP Council, followed by Japan, which joined in 1992.

The council now includes members from Australia, Canada, France, Germany, Hong Kong, India, Japan, Malaysia, New Zealand, Singapore, South Africa, South Korea, Switzerland, the United Kingdom and the United States. Austria, Brazil, Bermuda and Belgium are associate members, which means they intend to become full members with voting rights.

Globally, there were 63,163 CFP licensees at the end of June 2001. Of those, 37,649 were American, although in the first half of the year, about three-quarters of the 4,227 new designates were from outside the US.

Australia accounts for 3,527 CFPs - the fourth largest number behind the US, Canada and Japan - and contributed more than 500 new designates in the first two quarters of this year.

The CFP board has set itself a target of more than 130,000 licensees worldwide by 2005/06, of which about half are expected to come from outside the US.

Andersen cuts

UK flag - Andersen is to cut up to five per cent of its UK staff as a result of the recent slowdown in the global economy.

The smallest of the ‘Big Five’ professional services employers says the redundancies are likely to include staff at all levels of its 7,000 UK employees, and to affect both consultancy and traditional accounting work.

The job cuts are the latest in a spate of redundancies in the professional services industry, which is suffering as clients delay or cancel projects because of the worsening global economy.

Andersen, which employs 400 partners, says the redundancies would be compulsory and would be finalised after consultations with staff in the next two months.

It is understood there is no contradiction between the cuts and the statement released last month by Andersen’s global managing partner Joe Berardino that the firm had found the last year a “good opportunity to hire people”.

Andersen says the UK-only cuts are part of a plan to focus on sectors of strength, such as financial services, energy, utilities and technology, and media and communications.

Rule change

German flag - The German government will change the rules on asset values for insurance companies to allow for the sharp fall in securities prices following the September 11 terrorist attacks on the US.

The proposed asset changes, to be introduced in parliament next week and due to become law before the end of the year, will replace Germany’s existing rules obliging insurers to value equity holdings at the lowest historical levels, the so-called lowest valuation principle, a report in London’sFinancial Timesnewspaper claims.

It is understood that the call for the asset changes came from insurance companies, some of which are already facing significant claims due to the terror attacks. Germany’s justice ministry says the rule would be amended retrospectively to allow the new valuation principle to take affect from September 30.

The Gesamtverband der Deutsche Verischerungswirtschaft (GDV), Germany’s insurance industry association, welcomed the proposed changes saying the new rules would allow insurers to value their shareholdings at prices that better reflect sustainable and longer term levels.

Prudential revamp

UK flag - Prudential will radically revamp its flagging UK business by dropping its Scottish Amicable life assurance brand and exiting general insurance in a move to save US$256 million annually by 2004.

It is understood the revamp of the group is aimed at bolstering Prudential’s underperforming UK operations and is the result of a review undertaken by its new UK and European chief executive, Mark Wood, theFinancial Timesreports. It is also believed that the changes to Prudential will cost more than 2,100 people their jobs.

The group says it will focus on improving its UK new business margins by concentrating on more profitable sectors, such as group pensions and with-profit bonds. All Scottish Amicable life and pensions products will be rebranded under the Prudential name and the insurer will plough £50 million into PruLab, the division set up to develop new products.

The changes to the group will also see Prudential transfer its general insurance arm to Winterthur, the insurance arm of Credit Suisse, for £810 million.

Scale down

US flag - The global expansion of the online wealth management joint venture between Merrill Lynch and HSBC has been scaled down amid strong competition between retail brokers to serve wealthy clients.

Merrill Lynch HSBC says it would not be opening a service in Germany or Japan as planned, but would concentrate on the UK, Australia and Canada.

According to the UK’sFinancial Timesnewspaper, Merrill will eliminate the quarterly £18 ($26) portfolio fee charge, which was putting off some investors. It is also reducing the trading fee charged to investors who deal via telephone to £19.95 - the rate for online trades.

Merrill has faced intense competition for affluent customers from some 25 new banking and broking services that have been set up in the past year.

It is understood the group’s announcement two weeks ago that it would review all businesses that were not making a profit has prompted speculation that it was about to close the online venture. The joint venture, launched in May, is not expected to make a profit for four years, theFinancial Timessays.

Adviser charged

US flag - An American investment adviser has been charged with defrauding more than 100 investors, including elderly and professional athletes, out of US$12.5 million to US$18 million during the 1990s, the Securities and Exchange Commission (SEC) has revealed.

The American financial services regulator found that Donald D. Lukens engaged in a series of fraudulent schemes which conned investments from dozens of athletes, among them NBA veterans Byron Russell and Keith Van Horn, NFL stars Simeon Rice and Shannon Sharpe, Hall of Fame running back Eric Dickerson and former boxing champion Terry Norris. Other investors caught in Luckens’ scams include school teachers, doctors, small-business owners, disabled people and retirees on fixed incomes.

According to America’sFinancial Planning Magazine, the SEC alleges the number of victims could exceed 200 and losses could total somewhere near the US$25 million mark. Lukens' one time employee, James C. Allison of Roscoe, Texas, has also been accused of fraud.

The SEC is seeking a federal court judgment that Lukens did in fact violate the law, as well as an injunction prohibiting further violations, and an order requiring him to repay investors with interest and a fine.