More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
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.