FPA, NAPFA, state regulators and other groups urge Congress to impose fiduciary standard on all advice providers

Organizations representing investment advisers and consumers today called for Congress to ensure that fiduciary standards are not weakened as financial service regulatory reforms are enacted. “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,” according to a letter to congressional and administration leaders signed by the Financial Planning Association of Denver; the National Association of Personal Financial Advisors of Arlington Heights, Ill.; and Fund Democracy Inc. of Oxford, Miss. The letter sent to House Financial Services Committee Chairman Barney Frank, D-Mass., Rep. Spencer Bachus, R-Ala., the ranking minority member of the Financial Services Committee, Securities and Exchange Commission Chairman Mary Schapiro and Treasury Secretary Timothy Geithner. It was also signed by the Certified Financial Planner Board of Standards Inc., the Investment Advisers Association, the North American Securities Administrators Association Inc. and the Consumer Federation of America, all of Washington. Last week, the Treasury Department sent draft legislation to Capitol Hill that would require all brokers who act as advisers to come under the fiduciary standard. Brokers are obliged to ensure that all recommendations they make clients are suitable, while investment advisers are required to abide by fiduciary standards under which they are held liable for putting clients' interests first. While the groups applauded the intent of the provision, legislation should not “in any way undermine the fiduciary duty that already exists under the Advisers Act [of 1940],” the organizations wrote.