Financial Planning Coalition Files Amicus Brief in Support of Department of Labor Fiduciary Rule

Coalition Encourages Court to Dismiss Motion for Summary Judgment

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) – yesterday filed an amicus brief in the U.S. District Court for the Northern District of Texas, supporting the Department of Labor’s (DOL) fiduciary rule and opposing efforts to stop the rule from taking effect.

“The Coalition submits that the experiences of its professionals and their clients show that a broadly applicable fiduciary standard represents a win-win for the industry and the public,” the Coalition wrote in its brief. “The current regulatory framework, however, fails to align advisers’ interests with investors’ by leaving open significant loopholes that allow for the sale of financial products that may not be in the best interests of the investor. The Department’s strengthened fiduciary rule is therefore necessary and appropriate to protect the public.”

In its amicus brief, the Coalition specifically notes their opposition to the current attempt to stop the rule through a court challenge.

The Coalition’s full amicus brief, which can be viewed here, outlines three critical points:

  • Investors currently suffer from a lack of complete, truthful disclosures;
  • Empirical research and the Coalition’s practical experience confirm that middle income investors will retain ready access to professional financial advice under a fiduciary standard of conduct; and
  • Based on CFP® professionals’ experience under standards similar to those required by the Best Interest Contract Exemption, the rule provides a workable solution to allow for advisors to receive transaction-based compensation while providing advice that is in the best interests of the client.

The DOL, through careful deliberation and review, has crafted a final fiduciary rule that reflects extensive public comment and articulates common-sense standards for ensuring financial advice in investors’ best interest. The rule will significantly benefit and protect retirement savers with additional consumer protections and access to retirement advice.

The Coalition’s experience – involving nearly 80,000 financial-planning professionals of all business models and sizes – offers a reality that starkly contrasts with the speculation from the rule’s opponents, and provides the court with a unique perspective on the issues in this case. Thousands of CFP® professionals and FPA and NAPFA members across the country currently provide fiduciary-level services to investors with business models requiring no or very low minimum assets under management.

A 2013 Princeton Survey Research Associates Inc. study revealed that professionals operating under a fiduciary standard reported stronger asset and revenue growth for their clients. Further, a 2014 study showed more than 80 percent of financial professionals who had switched to a fiduciary standard reported that the change was mostly positive for their clients and their own practice. One company noted that it introduced new products with lower surrender fees, saying its products are more “flexible” and “fit better with new trends, customer preference and the market.”

The Coalition firmly believes that when financial professionals operate under a fiduciary standard of conduct, they can continue providing financial advice to investors of all income levels that serves the investors’ best interests.

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