A coalition of financial advisor trade groups and investor advocates warned Wednesday that the Securities and Exchange Commission’s March proposal for fiduciary guidelines could significantly weaken the fiduciary standard for financial advisors.
In a letter to SEC Chairman Mary Jo White, the group warned that the proposal was a step down from what advisors are currently required to perform and omits the obligation of the fiduciary to act in the best interest of the customer.
The SEC’s request for proposal included fiduciary guidelines for financial advisors and potential fiduciary standards for broker-dealers.
According to the group, the proposal “is far less stringent than that currently imposed under the [Investment Advisers Act of 1940]. If the SEC were to adopt this approach, we fear that it would significantly weaken the fiduciary standard for SEC-registered investment advisers, while adding few new protections for investors who rely on broker-dealers for investment advice.
“This approach would have negative consequences for investors and is one we would vigorously oppose,” said the group.
The letter was signed by the AARP, the American Institute of Certified Public Accountants, the Certified Financial Planner Board of Standards, the Consumer Federation of America, the Financial Planning Association, Fund Democracy, the Investment Adviser Association, the National Association of Personal Financial Advisors and the North American Securities Administrators Association.
Public comments are due on the SEC request by July 5, but the agency usually accepts submissions after the formal due date.