Comment on NASAA Proposed Investment Adviser Representative Continuing Education Program and Implementing Model Rule

The Financial Planning Coalition submitted a comment letter to the North American Securities Administrators Association (NASAA) in response to its proposed model rule regarding continuing education requirements for investment adviser representatives (IAR CE).  The Coalition expressed appreciation for NASAA’s process and the outreach efforts resulting in the IAR CE proposal, including gathering stakeholder input through meetings, surveys and other tools. The Coalition acknowledged the gap NASAA identified in the continuing education (“CE”) requirements of certain financial service professionals at the state level and recognized that NASAA and other regulators have an interest in addressing that gap.   

However, the Coalition emphasized that the IAR CE program and model rule should recognize and accommodate other CE requirements that investment adviser representatives (“IARs”) already must comply.  Absent such a recognition, the proposal may inadvertently and unnecessarily impose duplicative requirements on certain categories of financial professionals, including CERTIFIED FINANCIAL PLANNERTM (“CFP®”) professionals. Accordingly, the Coalition requests that NASAA include an exemption for CFP® professionals in NASAA’s IAR CE program and model rule. 

Read full letter here.

Comment on the SEC’s Proposal to Amend the “Accredited Investor” Definition

The Financial Planning Coalition submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) on the proposed amendment to the definition of “Accredited Investor”.  The proposal, among other changes, would “add new categories of natural persons that may qualify as accredited investors based on certain professional certifications or designations or other credentials.”  The Coalition pointed out the high level of professional competency that the CFP® certification requires, and as such, recommended that the CFP®designation be included in the proposed definition of “accredited investor.” Additionally, because many CFP® professionals are federally and state-registered Investment Adviser Representatives (“IARs”), the Coalition supports adding IARs registered under Section 203 of the Investment Advisers Act of 1940 (“Advisers Act”) and state-registered IARs to the “accredited investor” definition. 

Read full letter here.

Support for H.R. 1815, the “SEC Disclosure Effectiveness Testing Act”

The Financial Planning Coalition submitted a second letter of support regarding H.R. 1815, the “SEC Disclosure Effectiveness Testing Act.”  The Coalition is particularly pleased that the modified legislation continues to include a requirement for qualitative testing in the form of one-on-one cognitive interviews of investors.  Research conducted on behalf of the Coalition and others showed that this type of cognitive testing assesses investors’ ability to integrate information and synthesize it into a rational evaluation, and thus is the only proven way to determine whether a proposed disclosure document will achieve its intended purpose.

The Coalition appreciates the work the U.S. Securities and Exchange Commission’s (SEC) Office of the Investor Advocate has done to identify and confront the challenges to improve investor disclosure. We encourage Members of Congress to support the legislation when it is considered on the House floor.

Read full letter here.

Financial Planning Coalition Comment Letter to the New Jersey Bureau of Securities

The Financial Planning Coalition submitted a comment letter to the New Jersey Bureau of Securities on its proposed rule regarding the fiduciary duty of broker-dealers, investment advisers, and their respective representatives when providing personalized investment advice.

The Coalition’s position in support of a fiduciary standard of conduct for all personalized investment advice is supported by CFP Board’s newly revised Code of Ethics and Standards of Conduct, which becomes effective October 1, 2019.  The Code and Standards contains a genuine fiduciary standard of conduct that is broadly applicable yet business model-neutral.  Although there are many similarities between the Proposal and the Code and Standards, such as an inclusion of the duty of loyalty, there are key differences, including the manner in which conflicts of interest are resolved. 

Read full letter here.

Financial Planning Coalition Supports the SEC Disclosure Effectiveness Testing Act

The Financial Planning Coalition encouraged the House Financial Services Committee to approve H.R. 1815, the “SEC Disclosure Effectiveness Testing Act.” A fundamental public policy goal of the federal securities laws is to ensure full and adequate disclosure of “material” information to American investors. The expectation is that the disclosure will assist investors in making an informed investment decision.

Yet, information about financial issues and investments is often complex and technical in nature, and investor comprehension of this information typically is poor.  Not surprisingly, recent research conducted on behalf of AARP, Consumer Federation of America and the Coalition organizations, as well as separate research conducted by the SEC, all highlight the challenges and difficulties in developing clear, understandable investor disclosures.  In order to increase disclosure effectiveness, H.R. 1815 would require the SEC to engage in cognitive, one-on one interviews with investors to determine if the disclosure assists in their decision-making prior to finalizing any disclosure document primarily used by retail investors.

Read the full letter here.

Financial Planning Coalition Comments on Nevada’s Draft Regulations Regarding the Fiduciary Duty

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 March 1, 2019 submitted a comment letter to the Nevada Securities Division on its draft regulations regarding the fiduciary duty of broker-dealers (“B-D”s), investment advisers (“IA”s), and their respective representatives when providing personalized investment advice.

The Coalition’s position on a fiduciary standard for personalized investment advice is based upon the real-world business experience of more than 83,000 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 that the Coalition brings to the discussion about the proper standard of conduct for personalized investment advice. Based on this experience, the Coalition reiterates its longstanding support for a uniform fiduciary standard for investment advice and acknowledges Nevada’s initiative to close loopholes through regulations implementing Senate Bill 383, while advocating for stronger provisions in line with CFP Board’s newly revised Code of Ethics and Standards of Conduct.

Read full comment letter here.