CFP Board Welcomes Bill to Strengthen Consumer Protections
WASHINGTON, DC, July 14, 2009 — Certified Financial Planner Board of Standards, Inc. today joined forces with other pro-consumer and public interest groups to support provisions in the Investor Protection Act of 2009 that would subject all those who provide investment advice to a fiduciary duty of care that requires them to act in their clients’ best interest.
CFP Board teamed up with the Financial Planning Association (FPA), and the National Association of Personal Financial Advisors (NAPFA), the Consumer Federation of America (CFA), Fund Democracy, the Investment Adviser Association (IAA), and the North American Securities Administrators Association (NASAA), to press a shared view “that the highest legal standard—a fiduciary duty—should apply to all who give financial advice to clients.” The group submitted its views in a letter to Reps. Barney Frank (D-MA) and Spencer Bachus, (R-AL), who are Chairman and Ranking Member, respectively, of the House Financial Services Committee.
“While we applaud the intent evident in this provision and believe it represents a good starting point, we believe 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 (Investment Advisers Act of 1940),” the group said in its letter.
The policy of extending the fiduciary standard of care to all who give financial advice to clients is an underlying principle of a separate proposal that CFP Board is advocating with its partners in the Financial Planning Coalition—FPA and NAPFA. There are financial intermediaries beyond broker-dealers who are providing financial advice but are not subject to appropriate competency or ethical standards. The Financial Planning Coalition is working to fill that regulatory gap by seeking the establishment of a professional oversight board for financial planners and advisers who provide broad-based financial planning or advisory services to consumers or who hold themselves out as financial planners or advisers. The oversight board would establish baseline competency standards and would require that financial planners adhere to the fiduciary standard of care.
“Consumers deserve the tools to make sound financial decisions. Just like selecting a doctor, consumers should be able to clearly identify competent and ethical financial planners and advisors – who are bound by a code of professional conduct to put their interests first and foremost,” said Marilyn Capelli Dimitroff, CFP®, chair of CFP Board’s Board of Directors. “Our goal is to have all financial intermediaries who offer financial advice subjected to the high standards of a fiduciary.”
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