Until the early 1980s, personal financial planning services were primarily available only to the wealthy. Such services were provided by the so-called "old line" investment advisers at a not insignificant cost. However, with the advent of relative prosperity, middle income Americans became more financially astute. But while gross personal incomes rose, mounting inflation and taxes absorbed greater portions of their income. In response, to meet their retirement and other future financial needs, many individuals increasingly sought to rely upon their own personal private plans, either as a supplement to employer and/or government programs or, in some situations, as the primary foundation for their financial future. In doing so, however, many found that prudent selection from among a variety of investment and insurance alternatives had become an increasingly complex task. Thus, a substantial demand for relatively low cost financial planning services emerged.

Financial planning has been described as follows:

Or, more succinctly, a financial planner is as a person who offers individualized advice on investments, life insurance, and the overall general management of financial affairs with a view towards planning, implementing and maintaining a program designed to meet the client’s future financial needs.

In the context of life insurance agents, an agent who offers and sells only insurance products and provides little no other financial services would not be deemed a financial planner. But when an agent moves beyond simply advising upon and selling life insurance and enters into offering financial advice in general, he or she has moved into the realm of financial planning.

Sensing an opportunity, like other financial institutions, many life insurers began to position themselves within the newly emerging financial services marketplace not only to offer an array of diverse financial products, especially investment oriented products, but also to expand the scope of their activities to provide financial planning services.

Furthermore, by the time of the 1980s, the competitive trend toward products with lower premiums, including less expensive term insurance, portended lower commissions for insurance agents per unit of sale. Increasingly, life insurance agents felt threatened not only by this trend, but also by inflationary and other cost pressures of doing business. Consequently, life agents (as well as their companies) sought additional strategies for increasing income. Within this environment, many agents responded affirmatively to the opportunity of offering more comprehensive financial services, including not only more diverse insurance and/or other products such as mutual funds but also a broader scope of financial planning services.

There tend to be three types of personal individual financial planners. First, there is the "fee only" type who charges his or her clients a fee for the development of a financial plan but does not recommend specific investments, insurance contracts and/or other type of products. Second, there is the "commission only" type of planner who charges no fees for the development of a financial plan, but collects a commission on the securities, insurance or other products or services which he or she sells to the client. And, third, there is the "fee-commission" type who charges the client a fee for the planning services rendered and receives commissions for the sale of products. But, regardless of the approach adopted, the offering of financial planning services was and still is seen as a means to increase one’s income.

The number of individuals and organizations offering financial planning services grew dramatically. Schools developed training programs for financial planners, such as The American College program qualifying persons for a new professional designation, Chartered Financial Consultant (ChFC). Furthermore, the emergence of financial planning services on a broader basis to the less affluent population has not been confined to life insurers and their agents. As the demand for financial planning increased, others, such as accountants, lawyers, banks and securities firms, became increasingly involved. Boundaries of traditional disciplines were breached as several persons and institutions held themselves out as full financial planners.

Within this environment, both actual and potential abuses occurred. Many of the so-called financial planners lacked even the most basic qualifications to competently perform the financial planning task. Often they used their financial planning status to sell securities of issuers or insurance of insurers with which they were affiliated. Because of the rapid growth in the number of persons and firms offering financial planning services and the accompanying abuses associated with such growth, there has been increased focus upon the applicability and viability of both federal and state regulatory law applicable to the financial planning phenomenon.

The activities of financial planners, both individuals and organizations, cut across various regulatory disciplines at both the federal and state level, giving rise to a complex system of dual federal and multistate regulation.