NAIFA Blog

The SEC is accepting public comments on whether the Commission should impose a legal fiduciary standard on broker-dealers and their registered representatives. NAIFA opposes the fiduciary standard because it would not protect consumers any better than existing regulations (and could increase consumer costs for financial services) and it would make doing business more costly and difficult for broker-dealers. A NAIFA GovAlert explains the issue in greater detail.

So far, hundreds of NAIFA members have submitted thoughtful comments on the subject. Here are excerpts from several of them. (Click on the authors' names to read their complete comments on the SEC website.)

• James R. Johnson writes, "The adding of a fiduciary duty to my work will add costs which may result in my retiring (I am age 58) or slowing down substantially. I have significant experience to share with young advisors and my early retirement will deny them the opportunity to learn more about our profession." He adds that under a mandated fiduciary duty, "My expenses will rise. My errors and omissions insurance cost will skyrocket due to the litigation costs that will surface... . Seasoned professionals like myself will leave the trade to retirement rather than deal with the mess. Average Americans will either not be able to afford up front fees or they will not be willing to pay them. Financial advisors will increasingly focus on the wealthy and abandon the middle class. This is simply reality."

• Kristi L. Schaeffer writes, "We dedicate 25% of our time a day to compliance activities so additional paperwork and rules will not better serve clients, it will in fact do the opposite."

• Julie Veltus writes, "The new proposed oversight and regulation will continue to discourage us as we are already heavily burdened with compliance, testing, continuing education and industry surveillance to continue assisting the public with sound financial advice. ... [I]n all honesty I cringed at the thought of being forced into retirement because I really do not like to cook." 

• Brian Urie writes, "I wonder what problem(s) the proposed application of fiduciary standard for the solicitation of registered and licensed financial products are intended to solve. The SEC and insurance commissioners ought to have a good feel for the number of consumer complaints related to these transactions. Is the system that regulates the products to which I have referred broken?" 

• Daniel Moericke writes, "The bottom line is that you can't legislate integrity. Those of us who have it and are driven to do what is best for our clients (the vast majority) are already forced to jump through a lot of duplicative hoops to meet current standards. Those reps who do not have their clients' best interests at heart will find ways around any new requirements."
• NAIFA's letter to the SEC states, "the insurer and producer should make the decision when and if to use an illustration in connection with the purchase of a particular annuity."

You can browse through all of the comments submitted so far on the SEC website.

The comment period is a short one (only 30 days) and ends August 30, 2010. If you want your voice to be heard, please add your comments soon!