|
Various organizations
from across the financial spectrum have penned a letter to Congress asking them
to resist efforts to weaken proposed legislation requiring all financial
advisors to abide by the fiduciary standard of care that’s embedded into the
Investment Advisers Act of 1940.
In the joint letter to
leading members of the Senate Committee on Banking, Housing and Urban Affairs,
seven groups voiced support for an investor protection measure in the Senate’s
draft regulatory reform bill that’s part of the attempted overhaul of the
nation’s financial system.
In particular, the
groups says that Section 913 of the “Restoring American Financial Stability Act
of 2009” would provide “straightforward and sensible” consumer protection by
eliminating the broker-dealer exemption from the Investment Advisers Act. That
exclusion enables brokers to avoid registering as advisors if the advice they
provide is incidental to selling securities.
“For too long, brokers
have been free to market themselves as trusted advisers and offer extensive
advisory services without having to meet the fiduciary standard appropriate to
that role,” the organizations said. The draft bill “eliminates the legislative
loophole that has allowed this dual standard to persist.”
The participating groups
comprise the Consumer Federation of America, the North American Securities
Administrators Association, Fund Democracy, the Investment Adviser Association,
the Certified Financial Planner Board of Standards, Inc., the Financial Planning
Association and the National Association of Personal Financial Advisors.
The groups’ letter
included a fact sheet that attempts to debunk the perception put
forth by some industry lobbyists that the proposed bill imposes a
one-size-fits-all regulation on all people who provide investment advice, or
that it would impose burdensome costs to advisors, or that applying the
fiduciary standard across the board denies investors access to products and services.
The fact sheet also
attempts to refute that the Senate bill would prevent firms from charging
commissions, would impose a fiduciary standard on self-directed accounts, or
wouldn’t allow advisors to engage in principal trading (though the Investment
Advisers Act does impose some limitations on that activity).
The fact sheet can be
found on the Consumer Federation of America’s Web site at http://admin.consumerfed.org/elements/www.consumerfed.org/file/finance/Myths-Facts%20Fiduciary%20Duty.pdf.
|
