Not much has happened since the January release of the SEC's twin studies on financial advisor oversight and the obligations of broker-dealers and investment advisors when providing investment advice. To make sure its position doesn't get lost in the silence, the three organizations comprising the Financial Planning Coalition--the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Planners--say they sent a letter last week to the entire Congress urging members to support the SEC's call to expand the fiduciary standard of care to those providing investment advice to retail customers.
Additionally, earlier this month they sent a letter to key Congressional committees asking them to fully fund the SEC so it can effectively provide regulatory oversight of investment advisors.
"The public expects and deserves a strong uniform fiduciary standard of care," Marilyn Mohrman-Gillis, managing director of public policy and communications at the CFP Board, said during a brief press conference on Tuesday afternoon. "We believe this is common sense reform that doesn't create a new agency or burden taxpayers with new costs, and will benefit investors financially."
Mohrman-Gillis cited a survey conducted by the coalition, the Consumer Federation of America and other groups that found 97% of investors agreed that a financial professional should put the investor's interest ahead of their own.
Regarding SEC funding, the coalition wants Congress to authorize additional funding to the SEC in the form of fees assessed to entities regulated by the agency.
"Taxpayers don't bear the burden of funding the SEC, and consequently the SEC's funding has no effect on the deficit," said Nancy Hradsky, Napfa's professional growth and business development manager.
The two SEC studies were mandated by last summer's Dodd-Frank financial services reform bill. The SEC study on advisor oversight left three options on the table to be be decided by Congress: imposing user fees on SEC-registered advisors to pay for SEC exams; authorizing one or more self-regulatory organizations, under SEC oversight, to examine advisors; or authorizing the Financial Industry Regulatory Authority to examine dually-registered advisors who both sell products and dispense investment advice.
Due to budget deficits and rumblings from some Congressional members who want to scale back the recommendations of the Dodd-Frank bill, it's uncertain the SEC will be provided with the funding it needs to properly oversee investment advisors.
As for the fiduciary standard, earlier this month Republicans on the House Financial Services Committee asked the SEC to hold off proposing rules that would apply the same fiduciary standard of care to brokers that are currently applied to investment advisors. In addition, it was reported that a SEC staff person who helped draft the standard of care study has recommended postponing any rulemaking on the fiduciary issue until later this year.
"We'll be having further conversations with SEC staff regarding their intent on moving this forward, but we urge that they move forward on this as expeditiously as possible," Mohrman-Gillis said.