NAIFA Seeks Investor Act Changes

NAIFA also suggests other technical changes in the proposed legislation, according to Currey.

“The key here is preserving a variety of competitive cost-effective compensation arrangements, including the payment of commissions, that allow small- and middle-income investors to access suitable financial products and professional service to assist them in the pursuit of their financial objectives and financial independence,” Currey said.

Currey said NAIFA is concerned about certain references in the bill that imply financial professionals are generally interested in steering clients to products that will pay the highest commission, without regard to what is in the client’s best interest.

“This issue is a real source of contention with our membership,” he said.

He said professional advisors consider various factors before recommending a product.

“These include suitability-a rigorous standard that includes a questionnaire to assess the clients’ income, risk tolerance, age, tax status, liquidity needs, financial time horizon, investment objectives etc.-surrender charges, investment experience of clients, price of product relative to benefit, internal expense structure, carrier rating, policy coverage features, and the historic service standards of the company underwriting the product,” Currey said. “We believe any post-transaction analysis by a regulator to determine if an advisor acted in their client’s best interest should take all of these factors into consideration.”

Rep. Barney Frank, D-Mass., chairman of the committee, announced Thursday that the panel would move on the bill next week.