Category Archives: Press Releases and Statements

Coalition to Congress: Let DOL Promulgate a Final Rule to Protect Retirement Investors

The Financial Planning Coalition issued the following statement regarding the House Financial Services Committee’s vote in support of H.R. 1090, legislation designed to impede the Department of Labor’s fiduciary rulemaking:

“The need for a strengthened fiduciary rule under the Employee Retirement Income Security Act (ERISA) is long overdue. As H.R. 1090 heads to the House floor, we urge Congress not to intervene – through this bill or any other vehicle – and to let the DOL do its job and protect retirement investors.

“As recognized by 25 members of the House Financial Services Committee, the DOL is the expert agency charged with implementing fiduciary-level advice for tax-preferred retirement assets under ERISA. That fiduciary principle – wisely recognized by Congress in 1974 – is even more important in today’s retirement marketplace in which retirement investors are largely responsible for their own retirement savings.”

The Coalition sent a letter to members of the House Financial Services Committee on September 29, urging opposition to the legislation. H.R. 1090, the so-called “Retail Investor Protection Act,” does not protect retail investors. Rather, it inappropriately prohibits the DOL from adopting a rule to protect America’s retirement investors until after the Securities and Exchange Commission (SEC) issues a fiduciary rule. This would indefinitely delay or completely block adoption of a DOL fiduciary rule because the SEC is not required to issue a fiduciary rule, has yet to propose a rule – almost five years since Congress authorized it to do so – and may never do so. In contrast, the DOL, after years of study and an extensive economic analysis, has released a comprehensive proposal that would close loopholes in its 40 year-old rule and extend long overdue fiduciary advice to plans, plan beneficiaries, and IRA holders under ERISA.

Financial Planning Coalition: Alternative Fiduciary Proposals Fail to Meet Basic Requirements of Best Interest Standard

The Financial Planning Coalition issued the following statement after filing a supplemental comment letter supporting the Department of Labor’s (DOL) re-proposed fiduciary rule:

“The DOL’s re-proposed fiduciary rule is a long overdue and much-needed update to the 40 year-old definition of ‘fiduciary’ under the Employee Retirement Income Security Act (ERISA). Americans deserve a secure retirement, and the re-proposed rule, with suggested modifications, ensures that the retirement savings advice they receive is in their best interest.

“Proposals from financial services organizations and firms, described as alternative approaches to a best interest standard, would actually dilute the DOL’s efforts to put in place critical protections for retirement investors. All of the alternative proposals fail to meet the basic requirements of a true fiduciary standard under either ERISA or securities law, and fall significantly short of the DOL’s policy goals to more closely align the incentives of firms and advisers with the interests of our nation’s retirement investors.

“While some continue to argue that the rule is unworkable, the Coalition and its stakeholders offer their experience with the fiduciary standard to demonstrate the contrary. Regardless of business or compensation model, the Coalition’s 80,000 financial planners provide financial planning services under a fiduciary standard, successfully contributing to their firms and practices while providing needed benefits and protections for retirement investors.”

Financial Planning Coalition to Congress: Allow DOL Fiduciary Rulemaking Process to Proceed for the Benefit of American Retirement Investors

The Financial Planning Coalition issued the following statement in support of the Department of Labor’s (DOL) re-proposed fiduciary rule, in advance of this morning’s hearing before the House Financial Services Committee’s Subcommittees on Capital Markets and Government Sponsored Enterprises and Oversight and Investigations:

“The Coalition urges Congress to allow the DOL to continue its fiduciary rulemaking process without further delay or obstruction. The DOL has provided – and continues to provide – ample opportunities for input from all stakeholders.

“This strengthened fiduciary rule is long overdue. Under the current 40-year-old regulatory framework, too many Americans receive conflicted advice that is not in their best interest, which eats away at retirement investors’ nest eggs over time.

“The DOL’s re-proposed rule – with some important modifications – will benefit retirement investors and advisers alike, offering a workable, flexible approach across business models. The Coalition’s nearly 80,000 financial planners have committed to providing financial planning services under a fiduciary standard. And since CFP Board adopted the fiduciary standard for Certified Financial Planner™ professionals in 2007, the number of CFP® professionals has grown by more than 30 percent.

“Every American deserves a secure retirement, and the retirement savings advice they receive should always be in their best interest. The DOL’s rule would bring about much-needed re-alignment in retirement advice to better reflect today’s reality, in which Americans are responsible for their own retirement security.”

Financial Planning Coalition Testifies In Support of Re-Proposed Fiduciary Rule, Urges Prompt Action

DOL fiduciary rule is overdue, needed and workable with modifications

The 40 year-old definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA) for retirement investors is outdated and needs to be amended now, according to testimony given today by representatives of the Financial Planning Coalition, which is comprised of Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA).

Marilyn Mohrman-Gillis, CFP Board Managing Director of Public Policy and Communications, and Ray Ferrara, CFP®, Chairman and CEO of ProVise Management Group LLC, former chair of the Board of Directors of CFP Board and former FPA Board Director, stated in testimony at a hearing today held by the Employee Benefits Security Administration of the U.S. Department of Labor (DOL) that the Coalition strongly supports the DOL’s re-proposed rule – with important modifications to make it more workable across business models – and encouraged the agency to move forward with the rulemaking process.

In keeping with the Coalition’s efforts to advocate for policy measures that ensure financial planning services are delivered under a fiduciary standard, Mohrman-Gillis noted why the rule is urgently needed and beneficial for consumers.

“Retirement investors face a perfect storm in today’s financial services marketplace. With ever-increasing responsibility for their own retirements and the need to choose from an increasingly complex set of financial products and services, retirement investors more than ever need competent financial advice that is in their best interest,” Mohrman-Gillis said in prepared testimony. “Yet the current regulatory framework allows advisers’ interests to be misaligned with the interests of retirement investors resulting in the loss of billions of dollars in savings.”

The Coalition’s testimony also reflected its unique perspective drawn from CFP Board’s experience in establishing a fiduciary standard for CFP® professionals in 2007. Back then, firms and industry organizations made arguments similar to those being made regarding the DOL rule today, maintaining “that CFP Board’s fiduciary requirement was unworkable with their business models and that CFP® professionals would be forced to rescind their certification if required to operate under a fiduciary standard.”

Mohrman-Gillis remarked that, “contrary to those predictions, the number of CFP® professionals has grown by more than 30 percent to over 72,000 since CFP Board established a fiduciary standard. And many firms, to their credit, are recognizing the value of competent and ethical advice and are supporting CFP® certification for their advisers.”

Ferrara’s testimony underscored the workability of the rule, drawing on his more than 30 years of experience providing fiduciary-level advice across business models as a CFP® professional and small business owner of an independent financial services firm.

“Many in the industry say the re-proposed rule is unworkable, too costly and will force advisers to abandon middle-class clients. Based on our firm’s actual experience, we don’t share these views,” Ferrara said. He added that “the argument that this rule will diminish the availability of services to middle-class Americans is simply not credible. ProVise has successfully served middle-class clients under a fiduciary standard for years. The re-proposed rule still allows us, and everyone else to, provide advice using a commission or fee model. For anyone claiming that they are unable to serve middle-class clients under the re-proposed rule, ProVise and scores of CFP® professionals and FPA and NAPFA members across the country would be happy to help fill the gap.”

The Coalition outlined its full support in a 35-page comment letter submitted to the DOL on July 21, 2015.

Financial Planning Coalition Voices Strong Support for the Department of Labor’s Re-Proposed Fiduciary Rule in Comment Letter

Rule Is Overdue and Needed for Retirement Investors, Workable for Financial Advisers and Firms

Overdue, needed and workable. This is how the Financial Planning Coalition describes the Department of Labor’s (DOL) re-proposed fiduciary standard rule, which would protect retirement investors, realign the rules for advice to retirement assets and better reflect today’s reality, in which Americans are responsible for their own retirement security.

The 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) – strongly supports the DOL’s proposed rule to amend the outdated definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA). The Coalition outlined its support in a 35-page comment letter submitted to the DOL today.

“Retirement Investors face a perfect storm in the financial services marketplace,” the Coalition stated in its letter. With ever-increasing responsibility for their own retirements and the need to choose from an increasingly complex set of financial products and services, Retirement Investors more than ever need competent financial advice that is in their best interest. Yet the current regulatory framework allows Advisers’ interests to be misaligned with the interests of Retirement Investors; it does not require Advisers to clearly and openly disclose the standard of conduct under which they operate or their actual or potential conflicts of interest; and it permits market practices under which Retirement Investors are simply unable to distinguish Advisers who provide fiduciary-level services from those who do not.”

The letter covers three key areas:

  1. The DOL’s Re-Proposed Rule Represents Long-Overdue and Needed Consumer Protections. The re-proposed rule is needed to realign the current regulatory framework that allows for the misalignment of advisers’ interests with those of retirement investors. By requiring fiduciary accountability for all advice related to retirement assets, the rule will provide much needed protections to help retirement investors navigate the complex and confusing financial services marketplace.
  2. Arguments Against the Re-Proposed Rule Are Misplaced. Opposition arguments against the re-proposed rule do not adequately reflect the changes from the original rule proposal, are unsupported or rebutted by empirical research, and are inconsistent with the Coalition’s experience in establishing a fiduciary obligation for its stakeholders.
  3. Modifications Recommended by the Coalition Will Make the Final Rule Stronger. The Coalition suggests modifications, clarifications and changes that it believes will only strengthen an already comprehensive rule proposal, ensuring protections for retirement investors while providing advisers and financial institutions flexibility in implementing the final rule.

“While many in the financial services industry claim that they support a best interest standard, they argue that the re-proposed rule is unworkable. The Coalition believes, based on its experience applying the fiduciary standard to Certified Financial Planner™ professionals across business models, that the rule is both workable and essential to protect America’s retirement savers. Importantly, the DOL has demonstrated its willingness to work with the industry to develop a rule that will increase fiduciary protection for tax-preferred retirement assets that works across the varied financial services business models.”

Highlights of the Coalition’s Letter:

The DOL Rule Is Needed to Provide Long Overdue Consumer Protections

  • There are more than $14.4 trillion of retirement assets in 401(k) plans and Individual Retirement Accounts (IRAs); it is vitally important that fiduciary-level advice be provided when Americans rollover their 401(k) plan assets into IRAs. For many Americans, whether to rollover and how to invest their retirement nest egg is one of the most important financial decisions they will make. Under the current regulatory framework, all advisers are not required to make rollover IRA recommendations in their clients’ best interest, leaving Americans subject to conflicted advice related to their retirement savings.
  • Consumers want advice that is in their best interest. A 2010 InfoGroup study found more than 97 percent of Americans agree with the statement that “when you receive investment advice from a financial professional, the person providing the advice should put your interests ahead of theirs and should have to tell you upfront about any fees or commissions they earn and any conflicts of interest that potentially could influence that advice.”
  • Retirement investors are harmed – primarily in the form of higher costs and lower retirement savings – when they receive conflicted advice that puts the adviser’s interest ahead their own.
  • The DOL’s re-proposed rule would close loopholes in its current regulations that allow for conflicted advice by non-fiduciary advisers related to retirement assets.

Middle-Income Americans Will Have Access to Advice

  • It is simply not credible that advisers and their firms will stop serving middle-income Americans and walk away from providing services to retirement investors who have a collective $14.4 trillion in 401(k) plans and IRAs.
  • There are individual advisers, as well as existing and emerging business models, that successfully provide low-cost service to middle-income Americans under a fiduciary standard of conduct. Today, there are thousands of CFP® professionals and FPA and NAPFA members across the country who provide advice to consumers with no or very low minimum requirements for assets under management (AUM).
  • Opponents’ claim that the re-proposed rule will drive advisers out of business is inconsistent with the Coalition’s experience. While CFP Board heard these same arguments in 2007 when it established a fiduciary standard for CFP® professionals when providing financial planning services, the number of CFP® professionals has grown by more than 30 percent since then.
  • The re-proposed rule is business-model neutral, preserves consumer choice and ensures – through the Best Interest Contract (BIC) Exemption – that financial services firms and their advisers can still receivesales-based compensation for advice and comply with the ERISA fiduciary standard.
  • Studies have shown that financial advisers who have switched from a suitability standard to a fiduciary standard of conduct or who operate under both standards reported an increase or no change in the number of clients served – including no change in middle-income clients – when delivering services to their customers under a fiduciary standard.

Coalition Supports Closing Loopholes, Revising Definitions and Requirements

  • Advisers who provide “one-time” investment advice should be required to provide advice that is in the best interest of the client. The Coalition supports removing the current requirement that advice be provided “on a regular basis” to trigger a fiduciary obligation.
  • The Coalition supports the DOL’s proposal to remove the “mutual understanding” requirement in its current rule. Under the re-proposed rule, advisers will not be able to escape their fiduciary obligations by claiming that the advice provided was “solely incidental” to the recommendation or not the “primary basis” for the retirement investor’s decision-making.
  • The fiduciary standard should be extended to IRA owners so that advice related to the rollover of assets from employer-sponsored retirement plans to IRAs (including both the rollover decision and the allocation of assets in the IRA) would be provided at a fiduciary level.
  • Requiring a binding and enforceable contract through which retirement investors can hold advisers accountable to provide advice in their best interests is another important consumer protection that will provide a strong incentive for advisers and financial institutions to meet their fiduciary obligations and establish policies and procedures to mitigate conflicted advice.
  • The Principal Transaction Exemption as proposed by the DOL is needed and strikes an appropriate balance between providing advisers with the opportunity to sell products (for commission-based compensation) from their own inventory and protecting retirement investors from conflicted advice.

Coalition Proposes Modifications to Make the Rule More Workable Across Business Models

  • The Coalition suggests that the DOL either retain the eight-month implementation date for the re-proposed rule or allow a limited extension to no more than 12 months after the final rule is released. The Coalition believes that retaining a tight implementation timetable will address the immediate need for protection of retirement investors. To allow flexibility for full industry implementation of all the requirements, the Coalition further suggests that the DOL consider establishing phased-in enforcement deadlines for specific requirements (e.g., disclosure and record keeping requirements under the BIC Exemption).
  • The Coalition urges the DOL to explicitly recognize that certain marketing and promotion activities by advisers to attract new clients not be considered advice that triggers fiduciary obligations under ERISA unless the communications include advice that is individualized to or specifically directed to the recipient for consideration in making an investment decision.
  • The Coalition requests the DOL to establish a tailored prohibited transaction exemption (PTE) for AUM advisers under certain limited circumstances. As a general rule, advisers who charge fees for services (AUM, flat retainer, project fee or hourly fee) do not receive variable compensation and therefore do not need the protection of a PTE to provide advice under ERISA. However, under very limited circumstances – when an adviser who receives AUM makes a rollover recommendation that would increase the adviser’s AUM – an AUM adviser’s recommendation would be considered conflicted advice that would require a PTE. Given that an AUM adviser is generally already subject to a fiduciary standard, the Coalition requests that the DOL consider a streamlined sister exemption to the BIC Exemption, which it is calling “AUM Adviser Rollover Exemption.”
  • The Coalition is making a number of recommendations to allow for more flexibility with regard to the timing of the execution of the BIC Exemption contract tailored for the client type (existing or new) and tailored for an adviser’s business model. Recommendations include not requiring existing clients to sign the BIC Exemption contract and allowing new clients to sign the contract at the same time the client is required to sign account opening agreements.
  • The Coalition recommends that the DOL remove some of the disclosure requirements in the rule while still providing the retirement investor with important information about costs and services. For example, the Coalition recommends limiting the point of sale disclosure requirement for projected costs for one-, five-, and 10-year periods to costs that are known or reasonably known at the time of the transaction and narrowing the types of website disclosures that are required.

Financial Planning Coalition: Department of Labor Proposed Fiduciary Rule Long Overdue, Provides Important Consumer Protections

The Financial Planning Coalition issued the following statement in support of the Department of Labor’s (DOL) rule to amend the outdated definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA):

“Secretary Perez and the Department of Labor have developed a comprehensive, carefully constructed fiduciary rule that will secure critical protections for American retirement savers and preserve financial advisers’ flexibility and adaptability, regardless of business model. This proposal to update a 40 year-old rule is long overdue, especially given significant, historical changes to retirement planning, requiring Americans to be more responsible than ever for making complex retirement saving and financial decisions.

“While the Coalition partners believe there are areas in the proposed rule that can be clarified or modified to improve its application across business models – as the Coalition will outline in its comment letter – the DOL has made it clear that it wants input on particular ways to better operationalize the rule. The DOL clearly listened to many of the concerns articulated by firms, industry organizations and consumer and public interest organizations in response to 2010’s proposed fiduciary rule and the Coalition is confident it will do the same with the re-proposed rule.

“A secure retirement is an essential part of American life – often the result of years of hard work and saving. Any financial advice Americans receive related to their retirement savings should be squarely in their best interests. The DOL’s proposed fiduciary rule will significantly benefit and protect retirement savers, and should be allowed to proceed to full and open public evaluation and comment and then to implementation, without further delay or obstruction.”