NAIFA Encouraged by SEC’s Deliberate Pace on Fiduciary Rule

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One year after the SEC fiduciary report, trade group remains committed to ensuring middle-market access to affordable financial advice and services.

Saturday, Jan. 21, marks the one year anniversary of a Securities and Exchange Commission staff report to Congress recommending a fiduciary duty for broker-dealers and their registered reps. The National Association of Insurance and Financial Advisors has been involved from the beginning in the fiduciary issue debate and remains committed to working with the SEC to ensure that the final fiduciary rule does not hurt the ability of middle-market investors to receive advice and services.

When the fiduciary proposal arose during the drafting of the Dodd-Frank bill, NAIFA strongly advocated that any SEC fiduciary rule should not threaten the ability of advisors to receive commissions or sell proprietary products. Fortunately, safe harbors in the final Dodd-Frank law preserve these aspects of the business model that currently allows advisors to assist in the financial well-being of 75 million American families.

The original SEC study was completed within a congressionally imposed timeframe. SEC Commissioner Troy Paredes and then-Commissioner Kathleen Casey immediately issued a dissenting statement raising concerns about the study. Several members of Congress have since voiced similar concerns. Fortunately, the SEC has decided to give the issue more study and conduct a robust cost-benefit analysis before proposing a rule.

“An SEC fiduciary rule has the potential to bring so many unintended consequences it shouldn’t be rushed into,” said NAIFA President Robert Miller. “We’re pleased that the SEC is apparently working to address some of the unanswered questions left by the original study.”

One of NAIFA’s leading concerns is that a poorly drafted rule could increase compliance and litigation costs for advisors, which in turn would force higher costs for their base of middle-market clients. Modest investors could be left to their own devices, without access to affordable advice.

“Our biggest worry is that a rule designed to help consumers could wind up doing a lot of harm if it makes the cost of doing business untenable for advisors working with Main Street investors and everyday people saving for retirement,” said Mr. Miller. “NAIFA is encouraged by recent signals that the SEC is taking a deliberate approach and performing a detailed cost-benefit analysis on the proposed fiduciary rule. We’ve seen signs that the commissioners have begun to understand the important role NAIFA members play in protecting the financial well-being of millions of Americans.”

The SEC is expected to issue a request for public comment to assist in the cost-benefit analysis and NAIFA officials have expressed a willingness to help.

“At times during this debate, NAIFA has been painted in very broad strokes by people implying we’re opposed to any and all regulation,” Mr. Miller added. “That couldn’t be further from the truth. We favor intelligent regulation that serves a definite consumer-protection purpose and that preserves the ability of American families to obtain affordable financial services and advice.”


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