Tag Archives: Statement

Financial Planning Coalition Applauds Rep. Bachus’ Co-Sponsorship of H.R. 1627

Washington, D.C. – The Financial Planning Coalition applauds Rep. Spencer Bachus (R-AL), the Chairman Emeritus of the House Financial Services Committee, for becoming a co-sponsor of H.R. 1627, the Investment Adviser Examination Improvement Act.

This bill, introduced by Financial Services Committee Ranking Member Maxine Waters (D-CA) and Rep. John Delaney (D-MD), would authorize the Securities and Exchange Commission (SEC) to collect reasonable user fees from SEC-registered investment advisers for the sole purpose of increasing the dangerously low number of examinations the SEC currently conducts.

“We commend Rep. Bachus’ decision, as well as the decisions of the 14 additional Members of Congress who have recently signed on as co-sponsors of this important investor protection measure,” said the Coalition. “This support demonstrates that investor protection is not a partisan issue and we expect to see the number of co-sponsors on both sides of the aisle continue to grow.  Further, their decisions highlight that a user fee is a sensible solution to the vexing resource problem at the SEC – a solution that industry supports and that has no impact on the federal budget.  We look forward to continuing to support this legislation and to working with all Members of Congress who want to improve protections for American investors.”

The Financial Planning Coalition is a strong supporter of H.R. 1627 as the most cost-effective, efficient and industry-supported way of providing the SEC with the necessary resources to protect American investors – particularly in light of Congress’ failure to appropriate sufficient funds.  Due to a chronic lack of resources, the SEC currently is able to examine only about nine percent of the approximately 11,000 investment advisers registered with the agency.  This amounts to investment advisers being examined at the unacceptable rate of about once every 11 years.

H.R. 1627 is a targeted solution to the persistent resource gap at the SEC that would: 1) limit the use of collected fees to the SEC’s examination program; 2) require that the SEC determine the fees through a public rulemaking; 3) require the SEC to take into account factors such as the investment adviser’s size and assets under management when determining a fee; and 4) require the Comptroller General to conduct an audit of the funds’ use every two years.

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.”

Financial Planning Coalition Urges Passage of Legislation to Improve Investment Adviser Oversight and Better Protect Investors

Bill Would Increase Investment Adviser Examinations

Washington, D.C. – The Financial Planning Coalition – 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) – urges Congress to enact the Investment Adviser Examination Improvement Act of 2013, introduced by Representative Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee with Representative John Delaney (D-MD) as an original co-sponsor.

Authorizing the U.S. Securities and Exchange Commission to collect user fees from advisers to increase examinations is a pragmatic and cost-effective solution to a significant investor protection problem. It will have no financial impact on taxpayers or the federal deficit and is supported by the investment adviser industry. Increasing adviser examinations is good for both consumers and advisers.

The Coalition plans to work with Reps. Waters and Delaney to support this needed piece of investor protection legislation and encourages other members of Congress to enthusiastically endorse this important measure.

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.

Uniform Fiduciary Standard For Providing Investment Advice is Needed to Protect Investors From Harm

Members of the Financial Planning Coalition, with other “Friends of Fiduciary,” renewed their call for the  SEC to move forward with rulemaking on the uniform fiduciary standard in a joint letter to the five SEC commissioners, providing evidence from academic research, market analysis, and observation of industry practices to illustrate the harm to investors that results from the lack of a fiduciary standard.

Washington, D.C.– Documenting the harm to investors resulting from gaps in the rules governing investment advice, investor advocates and industry representatives  are renewing their call for the Securities and Exchange Commission (SEC) to better protect investors by establishing a uniform fiduciary standard of conduct consistent with Section 913 of the Dodd-Frank Act.

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Uniform Fiduciary Standard For Providing Investment Advice is Needed to Protect Investors From Harm

Members of “Friends of Fiduciary” Renew Call for SEC to Move Forward with a Rulemaking;
Major Benefits for Investors Seen From Fiduciary Standard,
While Alternatives Leave Much to be Desired

WASHINGTON, D.C. – April 15, 2014 – Documenting the harm to investors resulting from gaps in the rules governing investment advice, investor advocates and industry representatives are renewing their call for the Securities and Exchange Commission (SEC) to better protect investors by establishing a uniform fiduciary standard of conduct consistent with Section 913 of the Dodd-Frank Act.

In a joint letter addressed to the five SEC Commissioners, the groups provided empirical evidence from academic research, market analysis, and observation of industry practices that illustrates the harm to investors that results from a regulatory system that allows brokers to offer investment advice under a conduct standard appropriate to a sales relationship rather than an advisory relationship. Signatories to the letter include AARP, CFP Board of Standards, Consumer Federation of America, the Financial Planning Association, Fund Democracy and the National Association of Personal Financial Advisors.

In their joint letter, the groups wrote:

“The bifurcated approach to regulating investment advice offered by broker-dealers and investment advisers reflects the failure of regulatory policy to keep pace with changes in market practices. There is no justification for applying different standards of care to financial professionals who are offering the same services to investors. Over the years, broker-dealers have not only identified themselves as financial advisers, but they have offered virtually identical services to investors in order to compete. The Commission has permitted, at least tacitly, this evolution by failing to apply the appropriate regulatory standard.”

“Investors suffer concrete harm — in the form of higher costs and poorer performance – as a result. The Commission has an opportunity to reduce this harm to investors without imposing undue costs or regulatory burdens by applying a fiduciary standard to both broker-dealers and investment advisers when they offer personalized investment advice to retail customers. We urge the Commission to move forward expeditiously with a rulemaking, consistent with Section 913 of the Dodd-Frank Act, to achieve this goal.”

In addition to debunking any notion that a fiduciary standard will somehow prove injurious to investors, the letter notes that advice offered by a broker-dealer in a non-fiduciary capacity can significantly erode long-term investor returns: “As the Commission warned in a recent bulletin for investors, ‘[o]ver time, even ongoing fees that are small can have a big impact on your investment portfolio,’ reducing returns, shrinking a nest egg, and preventing investors from achieving financial goals. This impact was illustrated in an October 2013 Bloomberg Markets Magazine report on data filed with the SEC which showed that ‘89 percent of the $11.51 billion of gains in 63 managed-futures funds went to fees, commissions, and expenses during the decade from Jan. 1, 2003 to Dec. 31, 2012.’ Brokers have an incentive to keep clients in managed-futures funds because they receive annual commissions of up to 4 percent of assets invested and investors pay as much as 9 percent in total fees each year.”

The groups also note that the absence of a fiduciary standard allows brokers to sell products with substandard features, which may be suitable but not in the client’s best interest. Additionally, a broker-dealer’s reliance on a suitability standard instead of a fiduciary standard unfairly limits an investor’s options when seeking legal redress against their broker-dealer, according to the groups.

Significantly, the groups also note that there is no evidence to support the contention by some that better disclosure and enhanced investor education alone will offset the harm American investors suffer in the absence of a uniform fiduciary standard that is applicable to both broker-dealers and investment advisers when providing personalized investment advice to retail customers.