For consumers seeking decent financial advice, Congress is making a step in the right direction. Whether it will reach that goal is another story.

As part of the financial-industry legislation making its way through Congress, Sen. Herb Kohl (D-Wisc.) last week proposed a measure that would establish an oversight board for financial-planning professionals. The hope is that people who call themselves financial planners will have to meet minimum standards in the areas of competency and ethics.

As things stand now, anyone can call himself or herself a financial planner. In contrast, if you call yourself an investment adviser, you (or your employer) have to be registered with the SEC and fulfill a whole bunch of other requirements. If you operate as a stockbroker or insurance salesperson, you need a license. But right now, "financial planner" is a legally meaningless term along the lines of "financial adviser" or "financial consultant."

The problem with that, say the people who have persuaded Kohl to introduce the legislation, is that unscrupulous, incompetent and/or lazy financial pros are free to use the "financial planning" label merely as a sales tool -- one that misleads consumers into thinking that whatever product or service a pro recommends is part of a well-thought-out course of action for their financial life. Imagine a broker or investment adviser is talking with you about a possible investment you're on the fence about. If he says, "I think you should buy this," that won't carry half as much weight as "I think you should buy this because it's a critical part of the financial plan I've created for you." So he has an incentive to tell you he's developed a financial plan for you. But you have no idea whether that financial plan is any good -- or any different from the one he offers every other potential customer he meets.

Under the terms of the proposed measure, a financial planning oversight board would establish standards in three general areas:

• Competency, by means of educational and examination requirements;
• Practices -- that is, what a planner has to do to develop and execute a plan; and
• Ethics -- namely, that a planner should meet a fiduciary standard, putting clients' interests ahead of his own (a standard of care that's also an issue in other proposed financial-industry regulation).

The language of the legislation resembles the terminology used by the CFP Board of Standards, a group that bestows the designation of Certified Financial Planner on professionals who meet its requirements for education, experience, ethics and a qualifying exam. That group has teamed up with two associations of financial planners -- the Financial Planning Association and the National Association of Personal Financial Advisors -- to push for legislation that would bring federal oversight to financial planning. Kohl's proposal is the latest incarnation of that push. "Our profession currently has no regulation, unlike medicine or even hairdressing," FPA president Tom Potts said in a conference call with reporters this week. "We believe it's time that financial planning is regulated as a profession."

To be sure, there's some self-interest behind these planners' quest to be regulated. They'd like to build respect for their profession, whose origins they trace back about 40 years but which still is hardly understood by most Americans. They'd like the public to place greater value on the planning work that they do. And they'd like to distinguish themselves from professionals who focus on one area of people's finances, be it investments, insurance or something else, rather than comprehensively addressing several financial aspects of people's lives, from taxation and savings to estate planning and risk management.

But Kohl's proposal is pro-consumer, too. Americans are bewildered when it comes to the financial-advice industry; people don't understand who the players are, what these professionals' motivations are, and what they are (and aren't) legally obligated to do. People can't easily distinguish between someone who is offering them financial advice in their best interest and someone who is just trying to make a sale. This measure is a step toward clearing up the confusing landscape.

What will become of the proposed oversight board? That's an unknown. The Senate Banking Committee, led by Chris Dodd (D-Conn.), is slated to release a revised draft version of its financial-industry-regulation-overhaul legislation this week. Will Kohl's measure be an essential part of it? Will it be offered later as an amendment? Will it make it through Congress? A person can only hope.

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