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.
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.
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.
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.
AARP, Consumer Federation of America, and the Financial Planning Coalition on September 11, 2018, delivered the results of independent usability testing of the Securities and Exchange Commission’s proposed Customer Relationship Summary (CRS). The results of this testing clearly indicate the need for the Commission to revise and retest the content, language, and format of the CRS. Recognizing the important role the CRS plays in the Commission’s proposed Regulation Best Interest, the organizations hired Kleimann Communications Group, Inc. to conduct usability testing of the proposed disclosures.
The purpose of the testing was to determine whether typical investors would be able to make an informed choice between a brokerage account and an advisory account based on the disclosures provided in the CRS. In particular, testing focused on whether investors understood key differences in the two types of accounts, whether they understood the different standards of care that would apply, and whether they understood that broker-dealers are not required to provide ongoing account monitoring. The testing demonstrated that many, if not most, investors failed to understand this key information and, therefore, could not use the CRS to make an informed choice of accounts.
Read the full results of investor testing here.
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) –submitted three letters addressing the Securities and Exchange Commission’s (SEC) proposed rule “Regulation Best Interest”; the proposed IA Interpretive Guidance; and the proposed Form CRS Relationship Summary.
This package of proposals provides the SEC the long-awaited opportunity to raise the standard of conduct applicable to broker-dealers who provide personalized investment advice; reaffirm the fiduciary obligation of investment advisers; enhance investor understanding by requiring both broker-dealers and investment advisers to deliver a relationship summary document to retail investors; and reduce investor confusion by restricting the use of certain titles by broker-dealers.
Faced with growing responsibility for their own investment decisions and an increasingly complex universe of financial products and services, Americans today must depend on competent and ethical advisors to help make decisions critical to their financial security. When they seek financial advice, however, they face a marketplace in which it is virtually impossible to distinguish a salesperson from an advisor, or between those advisors who are legally obligated to provide advice in the investor’s best interest versus those who are not. The Coalition supports the goal of helping investors understand the type of financial professional they are dealing with and what they should expect from their relationship.
In the letters submitted to the SEC, the Coalition expresses its concerns regarding the package of rule proposals, and lays out its recommendations to strengthen the proposed rules, including encouraging the Commission to follow the lead of the CFP Board in revising its Standards to extend the fiduciary obligation of a CFP® professional to all Financial Advice.
The Coalition holds a longstanding interest in this issue and in numerous comment letters over the last several years has expressed its support for a fiduciary standard of care for all financial professionals who offer personalized investment advice to retail investors. A clear fiduciary standard equally applicable to all financial professionals who provide personalized investment advice, including broker-dealers, would help clarify the investment decisions Americans face every day.