More On Legal & Compliancefrom The Advisor's Professional Library
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
- 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.
Financial advisors would be overseen by the Obama Administration's proposed Consumer Financial Protection Agency (CFPA) legislation, which the Treasury Department sent to Congress June 30. Under the proposed legislation, financial advisors under the CFPA's purview would include those who provide "financial and other related advisory services; educational courses and materials on financial matters; or credit counseling, tax-planning, or tax-preparation services."
Dan Barry, director of government relations at the Financial Planning Association, says the FPA is currently reviewing the Administration's CFPA proposal. The proposal does include a pretty clear exclusion for broker/dealers and investment advisors registered with the SEC, Barry says.
However, the FPA wonders how the proposed CFPA would affect the Financial Planning Coalition's proposal to have a professional oversight body oversee financial planners. He says that right now, Coalition members--which includes the FPA, NAPFA, and the CFP Board--are talking about the professional oversight body idea with members of Congress. "We're getting some traction," on the idea, he says.
It looks as though annuities will remain under the purview of the Securities and Exchange Commission, as will mutual funds. Life insurance and long-term care insurance will also be exempt from CFPA oversight.