Thousands of Financial Planners Sign Petition Urging the Securities and Exchange Commission to Create a Uniform Fiduciary Standard

WASHINGTON, June 23, 2011 /PRNewswire-USNewswire/ -- The Financial Planning Coalition (FPC) today delivered a letter to the Securities and Exchange Commission (SEC), accompanied by a petition signed by more than 5,200 financial planners, urging the SEC to apply a fiduciary standard to anyone providing personalized investment advice to retail clients. The full letter can be found here and below.

"The Coalition appreciates the leadership you have shown in your support of a fiduciary standard for advice provided to retail investors. We are deeply concerned that current regulations governing the delivery of personalized investment advice are insufficient to protect investors," the Coalition stated in its letter to the SEC, which was also sent to members of Congress.

The SEC is comprised of the Financial Planning Association® (FPA®), Certified Financial Planner Board of Standards, Inc. (CFP Board) and the National Association of Personal Financial Advisors (NAPFA).

In its letter, the Coalition urged the SEC to use its authority under Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to establish a strong and uniform fiduciary standard of conduct for broker-dealers and investment advisers that is no less stringent than that under the Investment Advisers Act of 1940. The Coalition continues to advocate for rulemaking that would establish this uniform fiduciary standard.  

"The Financial Planning Coalition and thousands of financial planners across the nation believe that those who provide personalized investment advice to retail clients should be held to a fiduciary standard," stated the letter. "Requiring advisors to act in their clients' best interests should help restore the confidence of millions of American investors in the securities markets and facilitate the needed return to the markets as the economy continues to recover."

The Coalition's petition, the text of which is below, urges the SEC to move forward with this important rulemaking.  

Fiduciary Standard for Financial Professionals

We, the undersigned, believe a fiduciary standard should apply to anyone providing personalized investment advice to retail clients.

Following a fiduciary standard is simple: it includes providing clients with advice that is in their best interest without regard to compensation or other interests.  Full disclosure of all material conflicts of interest is essential, regardless of how the advisor is compensated.

Most consumers assume their financial services providers are already required to provide advice that is in their best interest.  Unfortunately, this is not the case.  As a financial service provider, I can choose to operate under different regulatory structures, each with different standards and requirements for how I treat my clients.  Some require me to put my clients' financial interests ahead of my own, some do not.  But there is no easy way for consumers to distinguish.

In a report issued in January 2011, the SEC recommended that the fiduciary standard be extended to all professionals providing personalized investment advice.  Requiring financial professionals to act under the fiduciary standard is a common sense way to greatly increase consumer financial protection.

As a financial service provider, I believe that those who provide personalized investment advice to retail clients should be required to act in their clients' best interests.  I urge the SEC to enact a rule implementing a fiduciary standard so millions of American consumers can be guaranteed that the financial advice they're getting is in their best interests.

About the Financial Planning Coalition: The Financial Planning Coalition, a group representing nearly 75,000 financial planners, is a collaboration of Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®), and the National Association of Personal Financial Advisors (NAPFA) formed to advise legislators and regulators on how to best protect consumers by ensuring financial planning services are delivered with fiduciary accountability and transparency.

To learn more, please visit www.FinancialPlanningCoalition.com.

June 23, 2011

The Honorable Mary L. Schapiro

Chairman

U.S. Securities and Exchange Commission

100 F Street NE

Washington, DC 20549

Re: Petition Supporting a Fiduciary Standard for Financial Professionals

Dear Chairman Schapiro:

The Financial Planning Coalition ("the Coalition") is pleased to send you a petition signed by more than 5,200 financial planning professionals urging the Securities and Exchange Commission (the Commission) to apply a fiduciary standard to anyone providing personalized investment advice to retail clients (1).  The Coalition, which consists of Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association (FPA), and the National Association of Personal Financial Advisors (NAPFA), represents financial planning professionals across the country with diverse business and compensation models who are committed to acting in the best interest of their clients.

The Coalition appreciates the leadership you have shown in your support of a fiduciary standard for advice provided to retail investors. We are deeply concerned that current regulations governing the delivery of personalized investment advice are insufficient to protect investors.  A recent study conducted by the Coalition, the Consumer Federation of America, and other groups confirmed that investors remain confused about the advice they receive (2). 

• Retail investors do not understand the regulatory differences between broker-dealers and investment advisers, or the standards of care that apply to each. 
• Most American investors mistakenly believe stockbrokers and insurance agents are required to act in the best interest of their clients. 
• Retail investors overwhelmingly believe that all financial professionals who give personalized investment advice should be required to act in the best interest of their clients and disclose conflicts of interest. 

For these reasons, the Coalition has advocated that the Commission use the authority granted under section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to establish a strong and uniform fiduciary standard of conduct for broker-dealers and investment advisers that is no less stringent than that under the Investment Advisers Act of 1940. 

The Coalition's petition, the text of which is below, urges the Commission to move forward with this important rulemaking. 

Fiduciary Standard for Financial Professionals

We, the undersigned, believe a fiduciary standard should apply to anyone providing personalized investment advice to retail clients.

Following a fiduciary standard is simple: it includes providing clients with advice that is in their best interest without regard to compensation or other interests.  Full disclosure of all material conflicts of interest is essential, regardless of how the advisor is compensated.

Most consumers assume their financial services providers are already required to provide advice that is in their best interest.  Unfortunately, this is not the case.  As a financial service provider, I can choose to operate under different regulatory structures, each with different standards and requirements for how I treat my clients.  Some require me to put my clients' financial interests ahead of my own, some do not.  But there is no easy way for consumers to distinguish.

In a report issued in January 2011, the SEC recommended that the fiduciary standard be extended to all professionals providing personalized investment advice.  Requiring financial professionals to act under the fiduciary standard is a common sense way to greatly increase consumer financial protection.

As a financial service provider, I believe that those who provide personalized investment advice to retail clients should be required to act in their clients' best interests.  I urge the SEC to enact a rule implementing a fiduciary standard so millions of American consumers can be guaranteed that the financial advice they're getting is in their best interests.

The Financial Planning Coalition and thousands of financial planners across the nation believe that those who provide personalized investment advice to retail clients should be held to a fiduciary standard.  Requiring advisors to act in their clients' best interests should help restore the confidence of millions of American investors in the securities markets and facilitate the needed return to the markets as the economy continues to recover. 

We appreciate this opportunity to provide the attached petition and signatures.  If you have any questions about the petition or the Financial Planning Coalition, please contact Marilyn Mohrman-Gillis, Managing Director, Public Policy and Communications, CFP Board, via telephone at (202) 379-2235 or via e-mail at [email protected]; Dan Barry, Managing Director of Government Relations and Public Policy, FPA, via telephone at (202) 449-6343 or via e-mail at [email protected]; or Karen Nystrom, Manager of Public Policy and Advocacy, NAPFA, via telephone at (847) 483-5182 or via e-mail at [email protected].

Respectfully submitted,

Kevin R. Keller
Chief Executive Officer
CFP Board

Marvin W. Tuttle, Jr.
Executive Director/CEO
FPA

Ellen Turf
Chief Executive Officer
NAPFA

cc: The Honorable Kathleen L. Casey, Commissioner
The Honorable Elisse B. Walter, Commissioner
The Honorable Luis A. Aguilar, Commissioner
The Honorable Troy A. Paredes, Commissioner
Ms. Eileen Rominger, Director, Division of Investment Management
Mr. Robert W. Cook, Director, Division of Trading and Markets
Senator Daniel Inouye, President Pro Tempore, United States Senate
Senator Harry Reid, Majority Leader, United States Senate
Senator Mitch McConnell, Minority Leader, United States Senate
Senator Richard Durbin, Assistant Majority Leader, United States Senate
Senator Jon Kyl, Assistant Minority Leader, United States Senate
Representative John Boehner, Speaker, United States House of Representatives
Representative Eric Cantor, Majority Leader, United States House of Representatives
Representative Kevin McCarthy, Majority Whip, United States House of Representatives
Representative Nancy Pelosi, Democratic Leader, United States House of Representatives
Representative Steny Hoyer, Democratic Whip, United States House of Representatives
Representative Jeb Hensarling, Republican Conference Chairman, United States House of Representatives
Representative Tom Price, Republican Policy Committee Chairman, United States House of Representatives
Representative James Clyburn, Assistant Democratic Leader, United States House of Representatives
Representative John Larson, Democratic Caucus Chairman, United States House of Representatives
Members of the United States Senate Committee on Banking, Housing and Urban Affairs
Members of the House Committee on Financial Services

(1) In signing the petition, individuals were given the option not to provide personal information. Of those who signed the petition, approximately 787 chose this option.

(2) Letter from Barbara Roper, Director of Investor Protection, Consumer Federation of America, Denise Voigt Crawford, President, North American Securities Administrators Association, David G. Tittsworth, Executive Director, Investment Adviser Association, Kevin R. Keller, CEO, CFP Board, Marvin W. Tuttle, Jr., Executive Director/CEO, FPA, Ellen Turf, CEO, NAPFA, and David P. Sloane, Senior Vice President, Government Relations and Advocacy, AARP, to the Honorable Mary L. Schapiro, Chairman, SEC (Sept. 15, 2010), available at http://sec.gov/comments/4-606/4606-2748.pdf.

SOURCE Financial Planning Coalition