Fi360 was one of many individuals and organizations to submit comments to the SEC on analyzing the effectiveness of existing regulatory standards for brokers, dealers, and investment advisers and identifying any gaps or overlap in regulation.

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.

For more information, visit the SEC's call for public comment or the House Financial Services' page on Wall Street Reform

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.

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.

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, 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.

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.

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.

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

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

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:

• Blaine's Statement
• Mr. Bogle's conference remarks (from his blog)
• The Fiduciary Distinction
• Background Paper

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:

• Read fi360's comments
• Read other commments, the request for comments and the proposed rule

Blaine is the author of the monthly Fiduciary Corner column in InvestmentNews magazine. He uses this space to give his insights and advice on investment fiduciary responsibility. Occasionally, he also has the opportunity to use the column to advocate for changes that promote a culture of fiduciary responsibility in the industry.

Columns:

• "SEC's Aguilar urges fiduciary standard" - June '09
• "How a 'universal' fiduciary standard would change how financial advisers do business" - May '09
• "Time to embrace a fiduciary standard" - March '09
• "Don't dance around principles" - February '09
• "Congress abdicates its fiduciary duty" - October '08
• "Can brokers be fiduciaries?" - September '08