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.
Ted Knutson of Financial Advisor reports that several consumer advocates have forcefully criticized SEC Chair Mary Jo White for slow and weak investor protection rulemaking, including the Commission’s failure to adopt a uniform fiduciary standard.
Excerpt– Securities and Exchange Commission Chairman Mary Jo White was attacked for slow and weak investor protection rulemaking by several consumer advocates in e-mails and conversations with Financial Advisor magazine.
“Investor protection under Chair White has been virtually nonexistent. Her positions in the crowdfunding and private offering rulemakings and her false promises regarding the fiduciary duty reflect a strong anti-investor bent,” said SEC Investor Advisory Committee member and University of Mississippi Law Professor Mercer Bullard on Tuesday.
Mark Schoeff of Investment News reports that the spending bill passed by the House of Representatives on June 16 raises the SEC’s budget by $50 million, but is $300 million less than the SEC needs to strengthen investment adviser oversight. Efforts by Rep. Maxine Waters (D-CA) to attach an amendment allowing the SEC to charge user fees to make up for this budget shortfall were unsuccessful. The bill also includes an amendment barring the SEC from imposing a fiduciary standard on broker-dealers during the federal fiscal year beginning October 1.
Excerpt– The House of Representatives approved a spending bill Wednesday that denies the Securities and Exchange Commission the funding it says it needs to strengthen investment adviser oversight.
In a 228-195 vote, the House passed a $21.3 billion appropriations bill that funds the SEC, Treasury Department and many other agencies. The measure gives the SEC a $50 million budget increase, about $300 million less than the agency requested. Under the bill, the SEC would operate on a $1.4 billion budget in fiscal 2015, which begins on Oct. 1.
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.
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.
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.