More On Legal & Compliancefrom The Advisor's Professional Library
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
In testimony before the House Financial Services Committee on June 24, Cathy Weatherford, CEO and president of NAVA, the Association for Insured Retirement Solutions, citing the comprehensive regulatory structure composed of the SEC, FINRA, and the 50 individual state regulators, rejected calls for additional regulation of the insurance industry.
"Given the current regulatory protections, adding yet another layer of regulation to the insurance industry is unnecessary," she testified. "Further, separating financial regulation and consumer protection regulation is not prudent and would present significant risks to consumers. It could also prevent the best products from reaching consumers in a timely fashion...In summary, while we do not believe an additional consumer protection regulator is necessary or even advisable for the insurance industry, we ask the Congress to continue to focus on how regulatory structures and necessary consumer protections can be operated and administered in the most effective manner. This is why we support Treasury's proposals to modernize and improve our system of insurance regulation, as well as its six principles for insurance regulation."
Weatherford also reaffirmed NAVA's commitment to the consumer protection principles of transparency, suitable sales and education, and training, noting that the organization urges uniform passage of the current NAIC Suitability, Disclosure and Senior Designation Models as well as the adoption of a summary prospectus by the SEC for annuity purchasers such as has already been adopted for mutual funds.