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March 11, 2010 at 07:00 PM
WASHINGTON BUREAU — Sen. Herbert Kohl has proposed a financial services bill amendment that would apply a fiduciary standard of care to all broker-dealers, registered investment advisors and financial planners who perform financial planning duties.
Kohl, D-Wis., chairman of the Senate Special Committee on Aging, would put all of those broker-dealers, RIAs and planners under the jurisdiction of a new Financial Planning Oversight Board.
The proposed amendment would affect “anybody who holds himself out to the public as a financial planner and provides, or offers to provide, directly to individuals advice with respect to the management of financial assets in not fewer than two areas of financial planning, including–investment planning, income tax planning, education planning, retirement planning, estate planning, and risk management,” according to the amendment text.
Kohl also has included a version of a House financial services bill provision that would provide grants to states that strengthen regulations regarding the sale of investment products to seniors.
Under the amendment, states would have to adopt standards put forward by the North American Securities Administrators Association, Washington, banning use of “senior” designations that are not backed by rigorous standards.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, says he hopes to unveil the underlying financial services bill Monday.
Dodd reportedly already has agreed to add an amendment by Sen. Timothy Johnson, S-S.D., and Michael Crapo, R-Idaho, that would have the U.S. Securities and Exchange Commission start by studying the “standard of care” issue,” to see whether there are any gaps or overlaps in the rules that apply to broker-dealers and investment advisors, rather immediately applying a single standard of care.
The National Association of Insurance and Financial Advisors, Falls Church, Va., blasted the proposed Kohl amendment, issuing a statement calling it “a harmful and unnecessary step that would impose additional regulation on already-regulated individuals.”
