WASHINGTON BUREAU–Insurance agents who sell only a limited number of financial products are sending in hundreds of letters to the Securities and Exchange Commission asking them not to hold them to a fiduciary standard when selling investment products.
With the Aug. 30 deadline for comments on the proposal remaining, 1,641 persons or entities, mostly investment advisers and members of the National Association of Insurance and Financial Advisers, Falls Church, Va., have said the agency should maintain the current suitability standard for broker-dealers.
An SEC analysis of comment letters by type indicates that 235 letters oppose a universal fiduciary standard, while 155 commentators support it.
The agency is seeking comment on Sec. 913 of H.R. 4137, the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provision mandates that the agency complete within 6 months of passage of the legislation a study on the fiduciary standard issue.
The provision in the law dealing with the issue then gives the agency the power to draft a new standard-of-care rule based on the findings of the report.
In asking that the current standard be retained, Sonya Barclay, a registered representative with Walnut Street Securities Inc., Wiliamsport, Pa., said that, “While I agree that regulations are important and required in the financial services industry, imposing legal fiduciary liabilities to an already heavily regulated industry in which registered representatives must already undergo rigorous compliance will only hurt our clients by adding another layer of regulation and more costs.”
Moreover, she said, “I do not believe moving to a fee-only model will result in any better or unbiased advice.”
She adds, “It is my belief that the majority of registered representatives already act in the best interest of their clients. There is always going to be some abuse in any area of business.”
Barclay said that changing the current rule would mean “subjecting registered representatives to the potential of never-ending lawsuits.”
Clifford S Webster, an agent for Northwestern Mutual Investment Services LLC, Boston, commented that, “Adding another layer of regulation will create another layer of bureaucracy without an offsetting benefit to my clients, though they will be directing or indirectly pay for it.
“Please do not pass the fiduciary standard for registered representatives, he added.
Todd Johnson, a professional association executive for financial advisors in Minneapolis, says he works on behalf of more than 1,500 registered representatives in Minnesota.