Re: Petition Supporting a Fiduciary Standard for Financial Professionals
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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. 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. • 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]. 2 Respectfully submitted, Kevin R. Keller Marvin W. Tuttle, Jr. Ellen Turf Chief Executive Officer Executive Director/CEO Chief Executive Officer CFP Board FPA 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 3 Financial Planning Coalition Petition: To: Securities and Exchange Commission Subject: SEC: Extend the Fiduciary Standard to Broker-Dealers Dear Securities and Exchange Commission Chairman Schapiro and Commissioners: 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. Visit the Financial Planning Coalition at www.financialplanningcoalition.com Petition Signatures: Name City and State Date A, BRUCE CARRI CONCORD, NH 04/25/11 A. DALE ZINN 06/10/11 A. Perry Hubbs II, MBA, CFP® Tarpon Springs, FL 05/03/11 A. Wayne Cranfill CFP(r) 06/15/11 A. Webster Hewitt 06/02/11