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