Committee Initiatives

June 6, 2012

Tell Congress “No” to an SRO
Congress is currently considering a bill that would authorize one or more self-regulatory organizations for oversight of investment advisers. The Committee believes that giving FINRA authority to regulate investment advisers would have a deleterious impact on the true fiduciary standard as followed by RIAs. Let your representative know that you oppose this bill and believe that the continuation of SEC oversight of RIAs is the best way to preserve the true fiduciary standard that protects investors as intended by the Investment Advisers Act of 1940

To learn how you can make your voice heard, read the attached letter from the Committee.

April 26, 2012

Committee honors Scott Simon as Fiduciary of the Year
The Committee presented its second annual Fiduciary of the Year award this week to honor an individual for contributions to advancing the vital role of the authentic fiduciary standard to investors, capital markets, and society. W. Scott Simon was chosen for his work writing the “Fiduciary Focus” column for Morningstar Advisor.

To learn more, see the press release announcing Mr. Simon’s award.

April 3, 2012

Committee’s Main Street Campaign lets investors know who puts their interests first
The Committee has launched a new campaign that encourages advisors to make a commitment to always act in the best interests of their clients and to put that commitment in writing. The Fiduciary Oath is a written pledge from the advisor to his or her clients that promises to always abide by the five core fiduciary principles. Every firm that provides a signed copy of the Fiduciary Oath to each of their clients is recognized on this site.

If you are an advisor who puts the interests of your clients first, visit the Fiduciary Oath page to learn more about the Oath and how your firm can be listed amongst those who have made the commitment.

March 9, 2012
Committee sponsors study on the real cost of fiduciary advice

A new study released this week looks into industry claims that a universal fiduciary standard of care would negatively impact the financial advice market. The study was authored by Professors Michael Finke of Texas Tech University and Thomas Langdon of Roger Williams University and was funded in part by the Committee for the Fiduciary Standard. Read the abstract below for a summary of their findings and download the full report from the Social Science Research Network.

Consumers who rely on the financial advice of experts are at an information disadvantage that may be exploited by advisers who are not required to make recommendations that are in the best interest of the customer. Registered representatives of broker-dealers are subject to a suitability standard under the Securities Exchange Act of 1934, while investment advisers are regulated as fiduciaries under the Investment Advisers Act of 1940. An early legislative version of the 2010 Dodd-Frank Act would have eliminated the broker-dealer exception from the definition of investment adviser under the Advisers Act. If enacted, this change would have subjected brokers to a common-law fiduciary standard (like investment advisers), but was postponed to examine the consequences of this policy change. It has been suggested that the imposition of a fiduciary standard on registered representatives would result in significant changes in how broker-dealers conduct business by limiting a representative’s ability to recommend commission investments, provide advice to middle-market clients, and offer a broad range of financial products. We take advantage of differences in state broker-dealer common law standards of care to test whether a relatively stricter fiduciary standard of care impacts the ability to provide services to consumers. We find that the number of registered representatives doing business within a state as a percentage of total households does not vary significantly among states with stricter fiduciary standards. A sample of advisers in states that have either a strict fiduciary standard or no fiduciary standard are asked whether they are constrained in their ability to recommend products or serve lower-wealth clients. We find no statistical differences between the two groups in the percentage of lower-income and high-wealth clients, the ability to provide a broad range of products including those that provide commission compensation, the ability to provide tailored advice, and the cost of compliance.

May 19, 2011
Committee: NAIFA “Hugely Misunderstands” Fiduciary Requirements of RIAs
Knut Rostad, Chairman of the Committee for the Fiduciary Standard, said, “Last week NAIFA issued a statement on its view of the differences between the suitability and the fiduciary standards. NAIFA President Terry Headley asserted that there is no evidence to support the claim that the fiduciary standard provides consumers superior protection compared to the suitability standard. In part, Headley argued that the fiduciary standard is actually weaker because it is ‘process-oriented, subjective and retrospective.’ NAIFA’s huge misunderstanding of fiduciary duties is quite startling.” read full response

May 3, 2011
Committee Replies to Republicans Call for More Study of the Fiduciary Standard

U.S. Congressman Scott Garrett, 5th District of New Jersey

In a May 3 letter, the Committee for the Fiduciary Standard wrote Scott Garrett, Chairman, Subcommittee on Capital Markets & Government Sponsored Enterprises, that it’s time to move forward on the fiduciary standard. Garrett wants more analysis before enacting a fiduciary standard, Knut Rostad, Chairman for the Committee, said that research and consensus already exist.

“The pros and cons of applying the fiduciary standard… have been studied extensively and this research should be examined,” said Rostad. “Our hope and expectation is that this process will help avoid further delay in implementing meaningful reforms to better protect retail investors.”

Read the Committee’s full reply.
Analysis of Senator Tim Johnson’s Proposed Study of Broker, Adviser Duties

April 18, 2011
Committee Supports RIA-only SRO
The Committee for the Fiduciary Standard today strongly expressed its support for an RIA-only SRO, if Congress permits the SEC to choose an SRO for IAs. The Committee said in a statement:

“If Congress determines there will be an SRO for Investment Advisors, SEC registered investment advisers deserve a choice. The Self-Regulatory Organization for Independent Investment Advisors, (SROIIA) seeks to be an SRO imbued with an unwavering commitment to the authentic fiduciary standard. This is what investors expect; this is what they need.” read more

SROIIA Replies to Committee: Advisors Should Put Clients First
The Self-Regulatory Organization for Independent Investment Advisors, (SROIIA) looks to uphold an “unwavering commitment to an authentic fiduciary standard” and to always seek for investment advisers to put their clients first. SROIIA believes that the authentic fiduciary is what investors expect and what they deserve.
press release

“SROIIA seeks to become synonymous with the bona-fide fiduciary standard and ensuring that clients’ best interests always come first,” says Timothy Collins, Co-CEO.

April 14, 2011
Diverse Groups Speak Out For DOL EBSA Rule to Modernize Reach of ERISA Fiduciary
A diverse group of organizations and groups who share a common interest in updating the definition of the ERISA fiduciary and who are generally supportive of the Department of Labor Employee Benefits Security Administration (DOL EBSA) proposed rule. Each group has submitted comment to EBSA.

Public hearing written testimony before DOL can be found here.

The groups are:

The Pension Rights Center
Norman Stein

Public Investors Arbitration Bar Association
Peter J. Mougey

National Employment Lawyers Association
Marc Manchiz

Fi360
Kristina Fausti

The Committee for the Fiduciary Standard
Knut A. Rostad
More information

April 12, 2011
Concerned Organizations Submit Letters to the Department of Labor
On April 12, 2011, Fi360, the National Employment Lawyer’s Association (NELA) and the Committee for the Fiduciary Standard recently submitted letters to the United States Department of Labor (DOL) following a March 18 meeting with the department’s Employee Benefits Security Administration (EBSA) staff and officials. The letters set out views regarding the fiduciary standard, generally, and then address several of the questions that either EBSA staff has raised, or have been raised buy commenters.
Letter from Fi360
Letter from NELA
Letter from the Committee for the Fiduciary Standard

March 2011
Fiduciary of the Year Award Named for Tamar Frankel

The Committee honors Prof. Frankel and calls for nominees who have advanced the ‘authentic fiduciary standard.’ Press release

View a video of Tamar Frankel discussing the evolution of fiduciary law over the past century. Prof. Frankel gave her comments at the Fiduciary Forum in 2010.

February 2011
The Fiduciary Standard: What Will Rulemaking Bring?
A distinguished panel of industry leaders and academics spar over the impact of the SEC’s Study and what rulemaking will mean to investors.

Click here to view the archived webcast.


Interview with keynote speaker:
Tom Bradley
President
TD Ameritrade Institutional


James A. Fanto
Professor
Brooklyn Law School

interview

Knut Rostad
Chairman
Committee for the Fiduciary Standard

interview

This special Feb. 10 webcast was presented by:The Center on Financial Services Law at New York Law School and The Committee for the Fiduciary Standard

January 2011
Committee Applauds SEC Study on Investment Advisers and Broker-Dealers as “Bold Blueprint” for Universal Fiduciary Standard

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The Fiduciary Forum 2010

September 24, 2010
The Fiduciary Forum 2010

In Fall 2010, as Required by Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) conducted a Study on Investment Advisers and Broker-Dealers of the stark differences between brokers’ suitability or “buyer beware,” sales standard, and investment advisor’s fiduciary duty to always put client’s interests first. The Committee believed this was an historic opportunity, the first in seventy years, to contribute to the discussion by providing regulators and policy makers the views of leading independent academics and practitioners in an open forum. more

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