Author Archives: DDrummond

Support for H.R. 1815, the “SEC Disclosure Effectiveness Testing Act”

The Financial Planning Coalition submitted a second letter of support regarding H.R. 1815, the “SEC Disclosure Effectiveness Testing Act.”  The Coalition is particularly pleased that the modified legislation continues to include a requirement for qualitative testing in the form of one-on-one cognitive interviews of investors.  Research conducted on behalf of the Coalition and others showed that this type of cognitive testing assesses investors’ ability to integrate information and synthesize it into a rational evaluation, and thus is the only proven way to determine whether a proposed disclosure document will achieve its intended purpose.

The Coalition appreciates the work the U.S. Securities and Exchange Commission’s (SEC) Office of the Investor Advocate has done to identify and confront the challenges to improve investor disclosure. We encourage Members of Congress to support the legislation when it is considered on the House floor.

Read full letter here.

Financial Planning Coalition Comment Letter to the New Jersey Bureau of Securities

The Financial Planning Coalition submitted a comment letter to the New Jersey Bureau of Securities on its proposed rule regarding the fiduciary duty of broker-dealers, investment advisers, and their respective representatives when providing personalized investment advice.

The Coalition’s position in support of a fiduciary standard of conduct for all personalized investment advice is supported by CFP Board’s newly revised Code of Ethics and Standards of Conduct, which becomes effective October 1, 2019.  The Code and Standards contains a genuine fiduciary standard of conduct that is broadly applicable yet business model-neutral.  Although there are many similarities between the Proposal and the Code and Standards, such as an inclusion of the duty of loyalty, there are key differences, including the manner in which conflicts of interest are resolved. 

Read full letter here.

Financial Planning Coalition Supports the SEC Disclosure Effectiveness Testing Act

The Financial Planning Coalition encouraged the House Financial Services Committee to approve H.R. 1815, the “SEC Disclosure Effectiveness Testing Act.” A fundamental public policy goal of the federal securities laws is to ensure full and adequate disclosure of “material” information to American investors. The expectation is that the disclosure will assist investors in making an informed investment decision.

Yet, information about financial issues and investments is often complex and technical in nature, and investor comprehension of this information typically is poor.  Not surprisingly, recent research conducted on behalf of AARP, Consumer Federation of America and the Coalition organizations, as well as separate research conducted by the SEC, all highlight the challenges and difficulties in developing clear, understandable investor disclosures.  In order to increase disclosure effectiveness, H.R. 1815 would require the SEC to engage in cognitive, one-on one interviews with investors to determine if the disclosure assists in their decision-making prior to finalizing any disclosure document primarily used by retail investors.

Read the full letter here.

Financial Planning Coalition Comments on Nevada’s Draft Regulations Regarding the Fiduciary Duty

The Financial Planning Coalition (“Coalition”) – comprised of Certified Financial Planner Board of Standards (“CFP Board”), the Financial Planning Association® (“FPA”), and the National Association of Personal Financial Advisors (“NAPFA”) – on March 1, 2019 submitted a comment letter to the Nevada Securities Division on its draft regulations regarding the fiduciary duty of broker-dealers (“B-D”s), investment advisers (“IA”s), and their respective representatives when providing personalized investment advice.

The Coalition’s position on a fiduciary standard for personalized investment advice is based upon the real-world business experience of more than 83,000 CFP® professionals who are stakeholders and members of the Coalition organizations. Importantly, CFP® professionals provide fiduciary-level services across business models – as investment advisers, broker-dealers, and insurance agents – and across compensation models – including commission and fee models. It is this unique perspective that the Coalition brings to the discussion about the proper standard of conduct for personalized investment advice. Based on this experience, the Coalition reiterates its longstanding support for a uniform fiduciary standard for investment advice and acknowledges Nevada’s initiative to close loopholes through regulations implementing Senate Bill 383, while advocating for stronger provisions in line with CFP Board’s newly revised Code of Ethics and Standards of Conduct.

Read full comment letter here.

Financial Planning Coalition Responds to New Jersey Bureau of Securities’ Pre-Proposal to Adopt Fiduciary Standard

The Financial Planning Coalition (“Coalition”) – comprised of Certified Financial Planner Board of Standards (“CFP Board”), the Financial Planning Association® (“FPA”), and the National Association of Personal Financial Advisors (“NAPFA”) – on December 14, 2018, submitted a comment letter to the NJ Securities Bureau on the pre-proposal to adopt a state-based fiduciary standard for personalized investment advice.This comment letter echoes many of the points made by John Crosby, CFP®, ChFC, CLTC, CRPC, on behalf of the Financial Planning Association, in testimony on November 19, 2018 before the Bureau.

The Coalition’s position on a fiduciary standard for personalized investment advice is based upon the real-world business experience of the more than 82,000 CFP® professionals who are stakeholders and members of the Coalition organizations. Importantly, CFP® professionals provide fiduciary-level services across business models – as investment advisers, broker-dealers, and insurance agents – and across compensation models – including commission and fee models. It is this unique perspective the Coalition brings to the discussion about the proper standard of conduct for investment advice.

Read full comment letter here.

Financial Planning Coalition, AARP and Consumer Federation of America Complete Investor Testing on Form CRS

AARP, Consumer Federation of America, and the Financial Planning Coalition on September 11, 2018, delivered the results of independent usability testing of the Securities and Exchange Commission’s proposed Customer Relationship Summary (CRS).  The results of this testing clearly indicate the need for the Commission to revise and retest the content, language, and format of the CRS.  Recognizing the important role the CRS plays in the Commission’s proposed Regulation Best Interest, the organizations hired Kleimann Communications Group, Inc. to conduct usability testing of the proposed disclosures.

The purpose of the testing was to determine whether typical investors would be able to make an informed choice between a brokerage account and an advisory account based on the disclosures provided in the CRS. In particular, testing focused on whether investors understood key differences in the two types of accounts, whether they understood the different standards of care that would apply, and whether they understood that broker-dealers are not required to provide ongoing account monitoring. The testing demonstrated that many, if not most, investors failed to understand this key information and, therefore, could not use the CRS to make an informed choice of accounts.

Read the full results of investor testing here.