Category Archives: Fiduciary

Delay on Fiduciary Just as Harmful as the Actual Harm

Financial Planning Coalition Responds to SEC official’s suggestion that it may not have enough data to support a fiduciary rulemaking

Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement in response to an SEC official’s suggestion that it may not have enough data to support fiduciary rulemaking:

“The Financial Planning Coalition has consistently urged the Securities and Exchange Commission (SEC) to move forward with a rulemaking requiring broker-dealers providing retail investment advice to adhere to a fiduciary standard of care – just as investment advisers are required to do under the Investment Adviser Act of 1940.

“This requirement is not only long overdue, but it is consistent with Section 913 of the Dodd-Frank Wall Street Reform and Investor Protection Act, which gave the SEC the authority to take this action.

“We fully support the SEC having sufficient information at its disposal to evaluate the need for such a rule. It is, however, disappointing to hear from a senior SEC official that the information the SEC has collected to date is ‘less than staff thought it was going to be.’

“There is convincing evidence in the existing record that demonstrates the need for this important rulemaking. In response to some concern that harm to consumers was not sufficiently supported in the record, the Financial Planning Coalition – and several other organizations – jointly submitted a supplemental letter to the SEC highlighting the evidence of harm in response to the SEC Request for Information.

“The information, the evidence and the data is there. It is time to move forward. The longer the SEC delays, the more harm will be done.”

Huffington Post: There Is a Future of Finance (And It’s Called Fiduciary Capitalism)

John D. Rogers, President and CEO of the CFA Institute discusses how the financial industry and investors would benefit if “an era of fiduciary capitalism emerges.”

Excerpt: Earlier this week, over 1,800 investment professionals took time out to visit Seattle for CFA Institute’s 67th Annual Conference. This was an important opportunity to join an initiative that is about the future of finance and shaping an industry that better serves society. Education has a crucial role to play in helping to restore to financial intermediaries a greater sense of social purpose, and that’s why CFA Institute and other professional organizations exist. A new mindset, one we could call fiduciary capitalism, is worth considering. The leaders here will likely include institutional investors – pension funds, endowments, foundations and sovereign wealth funds – as well as early adopters in the fund management industry. Based on a duty of care and loyalty and the obligation to place the needs of their beneficiaries above all other considerations, these investors share an agenda.

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Barron’s: A Uniform Standard of Care

John G. Taft, CEO of RBC Wealth Management U.S., discusses the need to extend a uniform fiduciary standard of care across the financial planning profession.

Excerpt: There is a regulatory reform that will enable the wealth-management industry to better serve the investing public. It is a simple way to ensure that individual consumers of financial advice receive the same high level of regulatory protection — no matter which firm they walk into, which advisor they work with, what kind of advice they receive, or how they pay for it, and without compromising their access to products or services or otherwise limiting their investing choices.

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Chicago Tribune: Know your options before investing in an adviser

In the Chicago Tribune, Gail Marks Jarvis stresses the need for investors to ensure that their financial planner is held to ethical standards and provides financial planning services pursuant to a fiduciary standard of care.

Excerpt: It’s a typical reaction: You don’t think you have the slightest idea how to invest your money for your future, so you figure you’ll go to an expert and get it right.

The trouble is that the investment business is full of conflicts of interest. And naive individuals, who go blindly for help, often end up getting dinged in the process. The more you need help, the more chance you will get taken.

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U.S. News & World Report: When Salespeople Call Themselves Advisors

Jim Lardner of Americans for Financial Reform discusses the challenges investors face when working with advisors who do not have investors’ best interests in mind, often recommending investments that will generate more money for themselves.

Excerpt: Saving for retirement is extra-hard these days, and not just because wages are low and millions of Americans are still struggling to make up for ground lost after the 2008 financial crisis. All too often, the difficulty is compounded by gaps in the rules for the financial professionals who provide retirement-planning advice.

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Financial Planning Coalition Statement on SEC Oversight Hearing

Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®), and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement in response to Securities and Exchange Commission (SEC) Chair Mary Jo White’s testimony during today’s House Financial Services Committee SEC Oversight hearing:

“The Financial Planning Coalition is gratified that Chair White and the SEC continue to make the consideration of a uniform fiduciary standard for broker-dealers and investment advisers a high priority. But the time for action in the name of investor protection is now. We urge Chair White and the SEC to heed the recommendations of investor advocates, adviser groups, and the major broker-dealer trade association, as well as its own Investor Advisory Committee, and proceed with this much-needed rulemaking under Section 913 of the Dodd-Frank Act.”

“In addition, the SEC’s current inability to regularly examine registered investment advisers needlessly exposes investors to greater risks of fraud and abuse. Authorizing the SEC to collect user fees from advisers is a pragmatic and cost-effective solution to fill the gap in the Commission’s funding, and we call on Congress, beginning with the House Financial Services Committee, to make this a reality.”

Throughout the SEC’s deliberations on these matters, the Coalition has sought to be a resource, including most recently documenting the clear harm to investors caused by the absence of a uniform fiduciary standard. The Coalition agrees with Chair White that if the Commission is to fulfill its mission to protect investors, it must be adequately funded to effectively examine SEC-registered investment advisers, who manage approximately $48 trillion of American investors’ assets each year. We are committed to working with the SEC, Congress and all interested parties to restore trust in our capital markets through the appropriate regulation and oversight of those who provide financial advice to American investors.