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.

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:

• The proposed bill
• fi360's statement regarding the bill
• fi360 Executive Summary

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:

• DOL proposed rule
• DOL rule fact sheet
• DOL hearing transcripts and complete comments received
• fi360 comments to the proposed rule
• fi360 comments to issues raised during public hearings

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:

• MSRB Draft Rule G-36 and Request for Comment
• fi360 Comments

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:

• The SEC study on investment advisers and broker-dealers
• Joint statement from Commissioners Casey and Paredes expressing their opposition to the report
• fi360 Press Release
• fi360 Executive Summary
• fi360 Comments

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:

• The SEC study on enhancing investment adviser examinations
• SEC Commissioner Elisse Walter's separate statement expressing her dissatisfaction with the report
• fi360 Executive Summary
• fi360 Fact Sheet
• fi360 Comments

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:

• The GAO study on financial planners and use of financial designations
• Highlights of the report provided by the GAO
• fi360 Executive Summary
• fi360 Comments

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.

To take the survey, click here.

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

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.

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

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.

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.

DOL Public Comments--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.

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:

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, 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:

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: