Financial service professionals who provide
portfolio management, asset allocation and financial advice should be regulated as investment advisers, six organizations said in a letter to Securities and Exchange Commission Chairman Christopher Cox.
As the Securities Industry and Financial Markets Association of New York and Washington was calling on the SEC to appeal a court decision overruling its broker-dealer registration rule at SIFMA’s annual independent-contractor broker-dealer conference in Baltimore, six organizations that opposed the rule wrote Mr. Cox urging him to support what they termed “pro-investor aspects” of the rule that were not overturned by the court ruling.
Those aspects include making it clear that discretionary management of assets and
financial planning services would require a broker to be registered as an investment adviser.
The letter, dated April 24, was signed by the Financial Planning Association of Denver, which successfully challenged the SEC rule in the U.S. Court of Appeals for the District of Columbia Circuit; Fund Democracy Inc. of Oxford, Miss.; the National Association of Personal Financial Advisors of Arlington Heights, Ill.; the Investment Adviser Association, the North American Securities Administrators Association Inc. and the Consumer Federation of America, all of Washington.
Further, the letter said, brokers that give non-discretionary advice that has “the core characteristics of investment advisory services” should also be required to be registered as investment advisers.
While the court decision “may cause temporary disruption, we believe it also presents an opportunity for the commission to develop a more rational, pro-investor policy for regulation of investment services providers,” the six organizations wrote.
The group asked that the SEC provide guidance to brokers on their obligations as well as investor education about the implications of the court decision while a more permanent policy is developed.
