WASHINGTON BUREAU — If a universal fiduciary standard of care governed all sales of investment products, many life agents would narrow the scope of services they provide for middle-income customers.
About 31% of the members of the National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va., who participated in a recent survey said they would limit their clientele to affluent clients only if a new universal fiduciary standard led to a 15% increase in compliance costs.
Another 20% said they would no longer offer securities to clients, and 14% said they would try to increase client fees.
The National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va., is reporting that finding in a summary of results from a recent survey of 3,372 NAIFA members and from a separate survey of 1,008 U.S. consumers.
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NAIFA commissioned the surveys to assess the possible effects of the standard-of-care changes that the U.S. Securities and Exchange Commission could make as it implements the Dodd Frank Wall Street Reform and Consumer Protection Act.
The Dodd-Frank Act gives the SEC until January 2011 to complete a study on possible omissions and gaps in the current system for regulating sellers of investments.
Today, a broad fiduciary standard, which requires affected professionals to act in the best interests of the client, applies to investment advisors.
A suitability standard applies to broker-dealers that sell a limited range of products through insurance agents. The suitability standard requires agents and broker-dealers to verify that a