It’s somewhat sobering to realize that I’ve been writing for, and about, financial advisors for 30 years now. During that time, I’ve never wavered in my belief that the emergence of client-centered, independent advice—led by the financial planning and accounting professions—is best for clients, for the public as whole and will someday be the way the majority of Americans receive financial advice.
With that said, there have been times when I’ve been particularly proud of, and encouraged by, the emerging planning profession. Two developments that stand out in my mind was the work of NAPFA and Ron Roge in the ‘90s to promote the many advantages of fee compensated advice; and the FPA’s successful lawsuit against the SEC to prevent the expansion of the “broker-exemption,” a.k.a the Merrill Lynch Rule, to managing client assets. But I don’t believe that I’ve ever felt better about financial planners and the rest of the independent advisory profession than I did Tuesday as I read a letter signed by the leading planning organizations and other like-minded organizations, voicing unequivocal support for a fiduciary standard for brokers—and concern that the SEC may be backing away from fulfilling that Dodd-Frank mandate.
The first thing that struck me about the letter to new SEC chair Mary Jo White is that the Financial Planning Coalition (comprising the CFP Board, the FPA and NAPFA) had finally gotten on board with virtually every other major financial consumer protection groups in the country: the other signators are the heads of the AICPA, the Investment Adviser Association, the Consumer Federation of America, NASAA, Mercer Bullard’s Fund Democracy, and even the AARP. This is clearly a group that the SEC will have to take seriously, with a message that leaves no room for “interpretation.”
“After a thorough analysis, however, there are several aspects of the [SEC’s March Request for Information regarding the possible extension of a fiduciary duty to broker-dealers] about which we are very concerned…,” wrote the group. “The assumptions contained in the RFI fail to include key elements of the fiduciary standard, such as the obligation to act in the best interest of the customer…If the SEC were to adopt this approach, we fear that it would significantly weaken the fiduciary standard for SEC-registered investment advisers while adding few new protections for investors who rely on broker-dealers for investment advice. This approach would have negative consequences for investors and is one we would vigorously oppose.”
But perhaps even more important, to my mind anyway, were the comments from each of the signing organizations, which were included in the accompanying press release, in support of the letter. Some, such as those by Heath Abshure, president of NASSA, David Tittsworth, executive director of the IAA, Lauren Locker, chair of NAPFA, Barry C. Melancon, president and CEO of the AICPA, and Mercer Bullard, president and founder of Fund Democracy, were clear statements of their historically unwavering support for an RIA-equivalent fiduciary standard for brokers.