Fiduciary Standard

CFP Board is working with a broad-based group of organizations that represent diverse interests and constituencies to ensure that all financial intermediaries who offer broad-based financial advice subjected to the high standards of a fiduciary. The organizations with which CFP Board is working include the Consumer Federation of America (CFA), the Financial Planning Association (FPA), Fund Democracy, the Investment Adviser Association (IAA), the National Association of Personal Financial Advisors (NAPFA), and the North American Securities Administrators Association (NASAA).

March 28, 2012: CFP Board and a coalition of consumer and industry organizations – including the Consumer Federation of America, Fund Democracy, AARP, Financial Planning Association, Investment Adviser Association, and the National Association of Personal Financial Advisors – submitted a letter to the Securities and Exchange Commission (SEC) with a proposed roadmap for the development of rule that would establish a uniform fiduciary duty for broker-dealers and investment advisers. The letter proposed a compromise framework for the rulemaking that started with a framework proposed in by the Securities Industry and Financial Markets Association (SIFMA) in July 2011, highlighting areas of agreement with SIFMA's proposed framework and offering several alternatives. The coalition of organizations refuted the claim that imposition of the fiduciary duty would force brokers to abandon their commission-based compensation models and their transaction based recommendations. They noted that the fiduciary duty is sufficiently flexible to be applied, consistent with Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the SEC Section 913 Study, to broker-dealer sales-related practices. The organizations further noted that their proposed approach would provide badly needed and long overdue protections for individuals who receive investment advice without diminishing the availability of services to investors.

March 23, 2012: In a comment letter to the Securities and Exchange Commission (SEC), CFP Board urged the SEC to develop improved pre-engagement disclosure requirements, also noting that full protection also requires that investment advice be provided under a uniform fiduciary standard of conduct.

December 15, 2011: The Boston Consulting Group (BCG) released a study on the likely costs of implementing SEC recommendations for increased oversight of investment advisers. In a survey conducted by BCG, more than 80% of IAs said they would prefer to pay user fees to fund enhanced SEC oversight. CFP Board, the Financial Planning Association, the Investment Adviser Association, the National Association of Personal Financial Advisors, and TD Ameritrade Institutional commissioned the study and a survey of investment advisers in response to calls for additional analysis of the recommendations in the SEC's study under Section 914 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Read more

September 13, 2011: In a prepared statement for the record before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, the Financial Planning Coalition urged Congress to put the interests of investors and small businesses first by supporting the SEC as it moves forward to establish a strong and uniform fiduciary standard of conduct for broker-dealers and investment advisers.

June 23, 2011: The Financial Planning Coalition sent a letter to the Securities and Exchange Commission (SEC), accompanied by a petition signed by more than 5,200 financial planners, urging the SEC to apply a fiduciary standard to anyone providing personalized investment advice to retail clients.

March 24, 2011: The Financial Planning Coalition sent a letter to members of Congress strongly urging them to support moving forward with key regulations that will help restore the investor confidence in our capital markets that is critical to leading America toward recovery.  The Coalition noted that the SEC is now in position to conduct a rulemaking to require that all financial advisors put their clients’ interests ahead of their own when they give personalized investment advice, an initiative the Coalition backs and considers to be a commonsense reform called for in the study.

December 16, 2010: The Financial Planning Coalition sent a letter to the Securities and Exchange Commission (SEC) providing comment on the study to enhance investment adviser examinations under Section 914 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, urging the Commission to adequately regulate investment advisers without delegating such responsibility to a self-regulatory organization such as the Financial Industry Regulatory Authority (FINRA).

November 30, 2010: The Financial Planning Coalition sent a letter to the Securities and Exchange Commission (SEC), responding to comments provided by the Securities Industry and Financial Markets Association (SIFMA) that set out to assess the impact of applying the Advisers Act to all brokerage activity, and urging the SEC to adopt a strong and uniform fiduciary standard for both broker-dealers and investment advisers when making personalized recommendations to retail customers.

September 15, 2010: The Financial Planning Coalition joined with AARP, CFA, IAA and NASAA to deliver a letter to the Securities and Exchange Commission (SEC), sharing the results of a new national investor survey showing that the vast majority of U.S. investors support a clear “Fiduciary Standard” for financial professionals. The survey, which makes a compelling case for imposing the Investment Advisers Act fiduciary duty on all those who give personalized investment advice about securities to retail investors, was presented to the SEC for consideration as the agency prepares the study of standards of care with regard to investment advice required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

August 30, 2010: The Financial Planning Coalition, in a letter to the Securities and Exchange Commission (SEC), is asking that the fiduciary standard of care—a key investor protection for all Americans who are investing for college, retirement and other needs—be extended to broker-dealers and other financial professionals who provide personalized investment advice to retail customers.

June 23, 2010: On June 23, 2010, the Financial Planning Coalition submitted a letter to Congressional leaders negotiating regulatory reform legislation urging them to oppose provisions which would have failed to meet the stated goal of requiring that brokers who provide investment advice about securities have the same fiduciary obligations as investment advisers and which would preempt the SEC’s authority to regulate equity indexed annuities. The Coalition urged the conferees to make critical changes to the fiduciary standard provision to protect investors.

June 14, 2010: CFP Board joined with consumer advocates, regulators and industry organizations, as well as U.S. Senators Daniel Akaka and Robert Menendez, to call on the U.S. Congress to require broker-dealers to meet the same fiduciary standard as investment advisers. This would provide critical protections to Main Street investors. In a letter to the conferees (Missing PDF), the group stated: "Financial regulatory reform presents an historic opportunity to improve investor protection for Americans and restore confidence in the market. Requiring all financial professionals to act in the best interests of their customers when they provide investment advice is the single most important protection needed by the average Main Street investors." The group urged the House and Senate conferees to adopt the House-passed legislation that extends the fiduciary standard of care to all financial professionals who give investment advice.

May 18, 2010: CFP Board and five other pro-consumer and public interest groups delivered a letter to members of the U.S. Senate in support of the Akaka-Menendez-Durbin amendment to the Restoring America’s Financial Stability Act, which would direct the SEC to issue rules requiring brokers who provide personalized investment advice to retail customers to have the same fiduciary duty as investment advisers. In the letter, the groups also expressed opposition to another amendment that fails to deliver on the promise of fiduciary protections.

January 7, 2010: CFP Board and six other pro-consumer and public interest groupsdelivered a letter to members of the Senate Committee on Banking, Housing, and Urban Affairs expressing strong support for an investor protection provision in the Senate’s draft regulatory reform bill that would require all those who offer investment advice to be held to the highest standard of care to their clients – the Investment Advisers Act fiduciary duty. The joint letter was accompanied by a “myths-facts” sheet (Missing PDF) that rebuts arguments and misinformation about the Senate regulatory reform bill’s fiduciary requirement for investment advice.

October 26, 2009: CFP Board and five other pro-consumer and public interest groups urged Members of the House Committee on Financial Services to ensure that provisions in the Investor Protection Act of 2009 would subject all those who provide investment advice to a fiduciary standard of care that requires them to act in their clients’ best interests. In a letter to Members of the Committee, CFP Board, FPA, NAPFA, CFA, IAA, and NASAA wrote to express their shared desire for the “inclusion of a strong provision to ensure that all those who offer investment advice are held to the highest standard – the Investment Advisers Act fiduciary duty.”

This group followed up with the Committee on November 2, 2009, sending a letter (Missing PDF) affirming the need for a strong, universal fiduciary duty for investment advice and expressing concerns over the degree to which that goal is threatened by changes made to date during the Committee's consideration of the Investor Protection Act.

August 6, 2009: CFP Board, FPA, IAA, and NAPFA sent a letter to Mr. Richard Hisey and Ms. Hye-Won Choi, Co-Chairs of the SEC’s Investor Advisory Committee in response to the Committee’s July 29th press release. In the letter, the four organizations expressed concern that the press release could be read to suggest that the fiduciary duty must be susceptible to “definition” in order to provide a workable standard. “Instead of trying to define fiduciary duty, we urge the Committee instead to consider a recommendation to clearly and unambiguously extend the fiduciary duty that investment advisors owe their clients under the Investment Advisers Act to brokers who provide investment advice.”

More information on the SEC’s Investor Advisory Committee is available here.

July 14, 2009: CFP Board and six other pro-consumer and public interest groups sent a letter to Rep. Barney Frank (D-MA), Chairman, and Rep. Spencer Bachus (R-AL), Ranking Member, of the House Committee on Financial Services, expressing concerns about section 913 of the Obama Administration’s proposed Investor Protection Act of 2009. The group stated that “revisions will be needed to unambiguously provide for the extension of the overarching fiduciary duty that investment advisers owe their clients under the Advisers Act to brokers and others who provide investment advice, that this fiduciary duty is explicitly recognized in law, and that the legislation does not in any way undermine the fiduciary duty that already exists under the Advisers Act.”