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Fiduciary Resource Center

Advocacy

Fi360 Advocacy is where the public and our members learn about our positions and activities related to the most important issues of the day and our efforts to promote those opinions. Check back to this page for updates on our most recent efforts and what you can do to promote the fiduciary cause.


Third annual fi360-ThinkAdvisor Fiduciary Survey

For the third consecutive year, Fi360 and ThinkAdvisor (formerly AdvisorOne) have teamed up on a survey to measure the understanding, attitudes, and opinions of the fiduciary standard by advisors across the spectrum of investment business models and affiliations. This year's survey was completed by 382 advisors from both Fi360's membership and ThinkAdvisor's readership. The results show that the majority of respondents believe all advice should be subject to a fiduciary standard, including applying the ERISA standard to IRA rollovers.

To review the complete results, download the full report of findings.

Also read ThinkAdvisor's coverage of the survey results.


Comments to SEC on Duties of Brokers, Dealers, and Investment Advisers

On March 1, 2013, SEC requested "data and other information, in particular quantitative data and economic analysis, relating to the benefits and costs that could result from various alternative approaches regarding the standards of conduct and other obligations of broker-dealers and investment advisers." The data and comments are intended to be used to inform the SEC as they consider a single fiduciary standard of care for the provision of retail investment advice. 

Fi360 has submitted comment to the SEC expressing our belief that there should be a uniform standard of conduct for personalized investment advice provided to retail investors, that investors expect a uniform standard, that the adoption of a uniform standard would not reduce the availability of appropriate investment services or investment products to retail investors, and that the fiduciary standard, as it applies to registered investment advisers under the Investment Advisers Act of 1940, is the appropriate standard.

You can download Fi360's comment letter.

You can read more about the data request and all other submitted comments on the SEC website.


Comments to Canadian Securities Administrators on Consultation Paper 33-403: The Standard of Conduct for Advisers and Dealers: Exploring the Appropriateness of Introducing a Statutory Best Interest Duty When Advice is Provided to Retail Clients 

 

On October 25, 2012, CSA published for comment a consultation paper exploring the potential benefits and competing considerations of introducing a statutory fiduciary, or "best interest," standard for advisers and dealers when they provide advice to retail clients. 

Fi360 has submitted comment to CSA expressing our belief that a fiduciary standard, consisting of the fiduciary’s twin duties of loyalty and care, is the utmost protection for investors and should be the standard for financial service providers who give investment advice and who manage client assets and we strongly encourage CSA to adopt a statutory best interest standard.

You can download Fi360's comment letter.

You can read more about the release of the paper and read the paper itself on the CSA website.


Comments to SEC on extension of Temporary Rule 206(3)-3T, Regarding Principal Trades With Certain Advisory Clients

On October 9, 2012, SEC proposed the further extension of temporary rule 206(3)-3T for an additional two years, which would extend the 'sunset' date to December 31, 2014. The original rule was adopted in 2007 to "provide an alternative means for investment advisers that are registered with the SEC as broker-dealers to meet the requirements of section 206(3) of the Advisers Act when they act in a principal capacity in transactions with certain of their advisory clients." The purpose of the rule was to assist the brokerage industry with transitioning 1 million customer accounts out of fee-based brokerage programs in the aftermath of the "Merrill Lynch" rule being vacated. That rule has since been successfully extended twice, with the current proposal calling for a third extension.

Fi360 has submitted comment to the SEC expressing our belief that the rule should not continue to be extended seemingly indefinitely. The original purpose of the rule has been fully accomplished and continuing the rule carries the potential for erosion of the fiduciary duty of dually-registered advisors. In addition, there is a clear lack of economic analysis to justify the benefits of the rule.

You can download Fi360's comment letter.

You can read the original rulethe proposed rule extension, and all comment letters related to the rule on the SEC website.

Fi360 also submitted comment to the 2010 rule extension. You can download that letter here.


Letter on SEC-DOL fiduciary rulemaking harmonization

In June of 2012, 33 members of Congress wrote to Secretary of Labor Hilda Solis, urging the Department of Labor and the SEC to coordinate closely on their respective fiduciary rulemaking initiatives and arrive at a "workable, consistent set of rules." While Fi360 supports the efforts of both agencies in strengthening fiduciary protections for investors, we believe that matching rules would not be consistent with the original intent of Congress when it passed ERISA and the Investment Advisers Act, nor would it be to the greatest benefit of the respective subsets of investors the two laws are meant to serve.

Fi360 has delivered a letter to all 33 of those representatives and to each member of the House Financial Services and Education and the Workforce Committees describing why "harmonization of rules" should not be a central objective of the rulemaking process. Despite the appealing sound of the concept, harmonization could undo valuable legal precedent and undermine important investor protections for retirement plans that were intentionally and wisely established under ERISA. It could also restrict flexibility provided by design in the Investment Advisers Act.

Download the letter


Investment Adviser Examination Improvement Act of 2012

Representative Maxine Waters (D-Calif.) has introduced a draft bill that would authorize the SEC to impose and collect user fees on investment advisers for the purpose of increasing the number and frequency of SEC examinations. The bill is co-sponsored by Representatives Barney Frank (D-Mass.) and Michael Capuano (D-Mass.).

Fi360 strongly supports this legislation and has provided an executive summary of the bill, a chart comparing the bill against the alternative proposal to authorize a self-regulatory organization for adviser oversight, and a legislative advisory for how you can help support this legislation through your Representative.


Second annual fi360-AdvisorOne Fiduciary Survey

For the second year in a row Fi360 and AdvisorOne have teamed up on a survey to measure the understanding, attitudes, and opinions of the fiduciary standard by advisors across the spectrum of investment business models and affiliations. This year's survey was completed by 380 advisors from both Fi360's membership and AdvisorOne's readership. The results show that advisors are increasingly becoming comfortable with operating under a fiduciary standard of care and believe it offers clear benefits over the alternative suitability standard for most investors.

To review the complete results, download the full report of findings.

You can also read AdvisorOne's coverage of the survey results in the following three-part series:


Executive summary of the Investment Adviser Oversight Act of 2012

House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Rep. Carolyn McCarthy (D-NY) introduced a draft bill that would authorize one or more self-regulatory organizations for the oversight of investment advisers.

Fi360 has provided an executive summary of the bill, detailing key provisions contained in the proposed legislation, including requirements for RIA registration, for potential SRO applicants, for coordination with state regulators, and other administrative and procedural details.

You can download and read the entire letter here.


Study on the Impact of the Broker-Dealer Fiduciary Standard on Financial Advice 

Fi360 helped fund an academic study that looked at what impact the fiduciary standard was having on the availability and cost of retail advice in those states that have a fiduciary standard for broker-dealers providing retail advice versus those states that do not. 

The study takes advantage of differences in state broker-dealer common law standards of care to test whether a relatively stricter fiduciary standard of care impacts the ability to provide services to consumers. The study finds that the number of registered representatives doing business within a state as a percentage of total households does not vary significantly among states with stricter fiduciary standards. A sample of advisers in states that have either a strict fiduciary standard or no fiduciary standard are asked whether they are constrained in their ability to recommend products or serve lower-wealth clients. We find no statistical differences between the two groups in the percentage of lower-income and high-wealth clients, the ability to provide a broad range of products including those that provide commission compensation, the ability to provide tailored advice, and the cost of compliance. 

The study was conducted by professors Michael Finke of Texas Tech University and Thomas Langdon of Roger Williams University. 

You can view the study on the Social Science Research Network

See also Fi360's letter to the Department of Labor informing them of the study's findings. 


Comments to the SEC regarding study of financial literacy among investors

The SEC is required by the Dodd-Frank Act to conduct a study that explores improving the timing, content, and format of disclosures to assist investors in becoming better informed when purchasing a retail product of engaging a financial intermediary.

Fi360 has submitted comments to the SEC to share our observations and opinions on how understanding the current financial literacy of investors is critical to harmonizing and improving the effectiveness of disclosure under current SEC rules and ultimately, to strengthen investor protection.

You can download and read the entire letter here.


Legislative alert on adviser SRO 

The House Financial Services Committee is expected to vote in the near future on a legislative proposal that would give FINRA the authority to establish a self-regulatory organization to regulate registered investment advisers. An SRO for investment advisers is likely to dilute the current robust fiduciary standard under the Investment Advisers Act of 1940 and similar state laws, and raise the cost of doing business.

Fi360 opposes the bill and calls on our members to contact members of the Committee, requesting them to vote 'no' on the bill.

For more information, instructions on how to lend your voice to the issue, and a list of Financial Services Committee members, read the legislative alert.


Comments on House Financial Services Committee's draft SRO bill 

The House Financial Services Committee has released a discussion draft bill "to amend the Investment Advisers Act of 1940 to provide for the registration and oversight of national investment adviser associations." The bill, to be introduced by Representative Bachus, would authorize the creation of one or more self-regulatory organizations for investment adviser oversight.

Fi360 opposes the bill and continues to believe that a self-funded SEC is the most cost-effective solution for investor protection.

Below are links to the draft bill and commentary provided by Fi360:


Comments on DOL's Definition of Fiduciary Rule Proposal

The Department of Labor issued a rule proposal that would expand the definition of advisory relationships that give rise to fiduciary duties to reflect changes in retirement planning since the original rule was written in 1975.

Below are links to the draft rule issued by DOL and commentary provided by Fi360:


Comments on the MSRB's Fiduciary Rule of Municipal Advisors

The Municipal Securities Rulemaking Board was required by the Dodd-Frank Act to establish rules with respect to municipal advisors that "prescribe means reasonably designed to prevent acts, practices, and courses of business as are not consistent with a municipal advisor's fiduciary duty to its clients."

Below are links to both the draft rule issued by the MSRB and commentary provided by Fi360:


Comments on the SEC's report on investment advisers and broker-dealers

The SEC was required by the Dodd-Frank Act to evaluate the effectiveness of existing legal and regulatory standards of care for personalized investment advice and whether gaps, shortcomings or overlaps exist. The study was expected to reach conclusions regarding the potential benefits and costs of a fiduciary standard of care for advice and to form the basis for regulatory rule-making thereafter. The report was issued on January 22, 2011.

Below are links to both materials provided by the SEC and commentary provided by Fi360:


Comments on the SEC's report on investment adviser examinations

The SEC was required by the Dodd-Frank Act to review and analyze the need for 'enhanced' ways to examine federally registered investment advisers, and to recommend to Congress if it believes "one or more" self-regulatory organizations should be designated by the SEC to augment its own examination program. The report was issued on January 19, 2011.

Below are links to both materials provided by the SEC and commentary provided by Fi360:


Comments on the GAO's report on financial planners and use of financial designations

The Financial Planning Coalition (comprised of FPA, NAPFA and CFP Board) had pushed for comprehensive regulation of financial planners as part of regulatory reform. However, when Dodd-Frank was passed, it included only a study by the Government Accountability Office (GAO) of two somewhat related issues: the effectiveness of the current regulatory framework for financial planners (including gaps in regulation), and the misleading use of various titles by financial advisors. Although the Dodd-Frank provision did not require analysis of a fiduciary standard for financial planners, it was thought possible that this subject might be addressed or referenced in the report to Congress. The report was issued on January 18, 2011.

Below are links to both materials provided by the GAO and commentary provided by Fi360:


Fiduciary Standard Survey

Fi360 has partnered with AdvisorOne Wealth on a survey aimed at guaging trends and attitudes about fiduciary issues and their impact on advisors. The results will be used to shed light on advisors' opinions towards the extension of the fiduciary standard and the current regulatory environment, including compensation issues, enforcement and how well the distinctions between brokers and investment advisors are understood.

Update: The survey is now complete, to view the results, visit AdvisorOne Wealth.


Comments to FINRA on Proposal to require a disclosure statement for retail investors

Fi360 was one of many individuals and organizations to submit comments to FINRA on their proposed rule to require their member firms to provide a written statement to the customer at or prior commencing a business relationship describing the types of accounts and services it provides, conflicts associated with such services and limitations on the duties the firm otherwise owes to retail customers.

To read the comment letter, click here.


Duane Thompson added as Senior Policy Analyst

Fi360 has added the former director of the Financial Planning Association as a consultant to assist Fi360 in coordinating its policy work with legislators and regulators in Washington, D.C., and provide analysis and commentary on the most pressing fiduciary issues of the day.

To read the press release announcing Mr. Thompson's arrival, click here.


Comments to SEC on Mutual fund distribution (12b-1) fees

Fi360 was one of many individuals and organizations to submit comments to the SEC on their proposed rule to reform 12b-1 fees. Specifically, we supported the SEC's proposal to differentiate and require better disclosure of these fees.

To read the entire comment letter from Fi360, click here.

To view all submitted letters, visit the public comments section for this issue on the SEC website

To view the proposed rule, click here


Comments to SEC on Investment Adviser Oversight study

Fi360 was one of several individuals and organizations to submit comments to the SEC for their study on how investment adviser examinations can be more efficient and effective and which organization should be tasked with oversight. Specifically, we recommended that the SEC should continue to be the primary regulator of investment advisers.

To view the proposed rule, Fi360's comment letter and all other submitted comment letters visit FINRA's webpage for regulatory notice 10-54.


Comments to DOL on Investment advice for participants and beneficiaries

Fi360 was one of sixty-eight individuals and organizations to submit comments to the DOL on forthcoming rules for investment advice under the Pension Protection Act. Included in our comments were our opinion that:

  • Past performance of a fund relative to the average for its asset class is an appropriate criterion for asset allocation
  • Modern Portfolio Theory and Efficient Market Hypothesis should be specified as generally accepted investment theories
  • Different levels of risk should not be assigned to passive versus active managed investment options
  • Fee neutral requirements would provide significant benefits to participants and beneficiaries

To read the entire comment letter from Fi360, click here.

To view all submitted letters, the public comment section of the DOL website for the investment advice rule

For more information, visit the Fact Sheet for the investment advice rule or read the entire text


Letter to support an Akaka-Menendez fiduciary amendment and SEC self-funding

The Senate will consider its financial reform legislation very soon. The Steering Group of the Committee for the Fiduciary Standard urges you to contact your Senators and voice your opinion on two key provisions. First, an amendment reinstating the fiduciary standard provision; second, keeping the provision which ensures SEC self-funding.

Your call or email to the Senators can be brief. We provide this example for you:

Dear Senator __________

I am an investment professional calling/writing from ____ (city) about the Senate's Restoring America's Financial Stability Act. I urge you to 1) support the Akaka – Menendez Amendment that would reinstate the fiduciary standard provision for brokers providing investment advice to investors, and 2) keep the provision which ensures SEC self-funding.

Fiduciary Standard. The future well-being of the nation requires that all Americans increase their savings and make the best possible investment choices. As investing has become more complicated, the role of advisors or brokers has become more vital. Investment Company Institute research found 73% of investors consulted a professional financial advisor before investing in a mutual fund. Unfortunately, not all financial advisors are required to be fiduciaries, who, by law, must put the client's best interests first. The key overriding mandates of the fiduciary standard are highlighted in five core principles. These principles are:

  • Put the client's best interests first
  • Act with prudence; that is, with the skill, care, diligence and good judgment of a professional
  • Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts
  • Avoid conflicts of interest
  • Fully disclose and fairly manage, in the client's favor, any unavoidable conflicts

SEC Self-funding. The bill currently includes a provision that allows for an SEC self-funding mechanism. This is critical to allow the SEC sufficient funding so that it can plan for long term internal investments and better fulfill its investor protection mission. I support the SEC as the exclusive regulator of federally registered investment advisers.

Call or write your Senator this week using this list of US Senators from the US Senate website.

If you call your Senator's Washington office:

  1. Ask to speak to the legislative assistant for financial services or banking. Say you are calling concerning Restoring America's Financial Stability Act. (Be persistent. You may have to call two or three times before you reach the staff member.)
  2. When you reach him or her.... immediately say you are a business person from his/her district / state. As an RIA (if you are) you represent, nationally, (RIAs) who have $34 trillion in assets AUM as of April 2009.
  3. Talk for just a minute (no more unless asked questions), as a practitioner who serves investors every day, about why the FS and SEC self-funding is important.
  4. If the staff member wants more information (don't be surprised that he/she will NOT ask for more information from you, as these young staffers have dozens of issues to cover and will want just the basic facts) say that you can have the Chairman of the Committee, Knut Rostad call them. If so, email Knut the name and phone number of the staffer at KAR@rpjadvisors.com and he will follow up.

The Committee for the Fiduciary Standard

The Committee for the Fiduciary Standard was formed to help bring public and media attention to the importance of codifying the fiduciary standard. As part of this awareness campaign, the Committee seeks to make clear the distinctions between the professional fiduciary standard and the commercial suitability standard that is applied to sales activities in financial services. The Committee is not opposed to brokers, insurance agents or any other sales role but, when it comes to advice, the Committee is adamant in its positions that (1) the fiduciary standard must apply as the cornerstone of such trusted relationships and (2) disclosures by financial service providers must be crystal clear as to whether they intend to accept fiduciary responsibility or not.

To learn more and join The Committee for the Fiduciary Standard, visit the group page on LinkedIn Once there, click the "Join the Group" option to officially join. You will need a LinkedIn profile to join.

Regardless of whether you decide to join the Committee or not, we invite you to sign a petition in support of the authentic fiduciary standard.


Letter to House Subcommittee in support of 401(k) Fair Disclosure for Retirement Security Act

The 401(k) Fair Disclosure for Retirement Security Act would provide full and fair 401(k) fee and cost disclosure in a format that would allow fiduciaries to perform more uniform and effective assessments. In addition, increased transparency fosters more meaningful competition among service providers and helps assure plan sponsors and participants that the expenses they incur are fair and reasonable.

View the letter Fi360 sent to the House Committee on Education and Labor's Subcommitte on Health, Employment, Labor and Pensions in support of this Act.

Learn more about the Act and see who else supports fair disclosure.


Letter to SEC Chairman Schapiro in Support of Recent Comments by Commissioner Aguilar

On May 7, 2009, SEC Commissioner Aguilar gave a speech at the Investment Advisers Assocation Annual Conference. In his comments, Aguilar highlighted key components for regulatory reform that would benefit the best interests of investors, including protecting a real fiduciary standard and maintaining SEC oversight of investment advisers. His comments have not gotten the public traction of other proposals that would result in a watered down fiduciary standard with oversight by a conflicted self-regulatory organization. In response, we sent the attached letter to all five SEC Commissioners and other key directors in the SEC.

View the letter

If you share Fi360's views on regulatory reform for investment advice, we encourage you to contact the SEC Commissioners at SEC headquarters and your elected representatives in the House and in the Senate to voice your support of Commissioner Aguilar's remarks.


Conference Webinar for Media: The Promise and Prospect of a New Fiduciary Environment

At our fifth annual National Conference in Scottsdale, AZ, we held a webinar for media to discuss the current debate on financial regulations, including the adoption of a fiduciary standard of care for all investment advice. Presenting on the call were Fi360 CEO Blaine Aikin, Fi360 Director of Legal and Regulatory Affairs Kristina Fausti, noted columnist Bob Veres, and leading ERISA attorney Fred Reish of Reish Luftman Reicher & Cohen. The topics of discussion included where a robust fiduciary standard can already be found, what would be different if that standard were to be implemented for all investment advice, what an ideal regulator looks like, and the strengths and weakness of the current regulatory proposals from various parties. The session also included Q&A from the media present in-person and via phone line.

View the webinar


New Director of Legal and Regulatory Affairs

In April 2009, Fi360 added a new position, Director of Legal and Regulatory Affairs. The position was filled by Kristina Fausti, a former special counsel in the office of the chief counsel of the Division of Trading and Markets with the Securities and Exchange Commission. Kristina's primary duties are to research, write, speak and otherwise represent Fi360 on legislative and regulatory developments impacting investment fiduciaries. This new position is part of Fi360's growing initiative to proactively impact the fiduciary environment for the benefit of investors

View the press release on Kristina's hiring


A Call for a Fiduciary Standard

On March 13, 2009, Fi360 CEO Blaine Aikin and Vanguard Mutual Fund Group founder John C. Bogle held a press event at the Investment Advisor Summit in Washington D.C. to call on Congress for the enactment of a fiduciary standard for all investment advice. Blaine on Mr. Bogle's comments focused on the lack of investor confidence in capital markets and the differences in a commercial standard versus a true fiduciary standard.

More information on the event:


Comments to DOL on Final Rules and Class Exemption for Investment Advice to Participants and Beneficiaries

On February 26, 2009, Fi360 responded to the Department of Labor Employee Benefits Security Administration's request for public comments on the Final Rules and Class Exemption for Investment Advice to Participants and Beneficiaries. The proposed rule would allow for a class exemption for brokers to provide investment advice if they followed a number of "fiduciary-like" procedures and disclosures. In our opinion this was misguided regulation that opened the door to conflicted advice and added to the public perception that the industry was being favored over the interests of investors.

More information:

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