Financial Planning Coalition Stresses Fiduciary Rule In SEC Letter

The Financial Planning Coalition says the Securities and Exchange Commission’s proposal to develop standards of conduct for investment advisors and broker-dealers can and should complement the Department of Labor’s fiduciary rule.

In a letter to the SEC—in response to a request for comments on the proposal to develop standards—the coalition said, “The lack of a uniform fiduciary standard exacerbates investor confusion and causes investors harm.

“SEC action to properly apply a fiduciary standard to all personalized investment advice is long overdue. Any SEC rule-making on standards of conduct for broker-dealers providing personalized investment advice to retail investors should not serve as a replacement of the DOL’s 2016 fiduciary rule, but rather a complement to it,” said the coalition.

The coalition is made up of the Financial Planning Association, the Certified Financial Planner Board of Standards and the National Association of Personal Financial Advisors.

The SEC should promote a fiduciary standard under the securities laws for financial services professionals, the coalition says. In addition to coordinating with the DOL’s fiduciary rule, SEC standards can be complementary to the new standards of conduct being considered by the CFP Board.

Having advisors just disclose potential conflicts of interest to clients and prospects is not sufficient for the industry, says the coalition. A pure fiduciary rule where the best interests of the client are put first is necessary.

“The coalition believes that there is no justification for different standards of care for financial professionals who provide the same services to retail investors,” the group said. “A strengthened fiduciary rule, encompassing the duties of care and loyalty, is both necessary and appropriate for SEC-registered firms and representatives to protect American investors.”

It continued, “A meaningful, legally enforceable uniform fiduciary standard of care that puts investors’ interests first is the best way to strengthen investor protection when personalized investment advice is dispensed.”