In Effort to Collect 'Stories' from Investors, NAIFA Urges CFA to 'Tell All'

By Juli Y. McNeely, LUTCF, CFP, CLU
NAIFA President


The Consumer Federation of America is seeking “stories” from individual investors that most certainly will put financial advisors in a bad light. And from the story reported in the Wall Street Journal, it’s clear the CFA’s goal is not to discredit all advisors – only those who currently operate under a suitability standard of care.

As the Department of Labor and the Securities and Exchange Commission consider rules that would require all advisers be held under a uniform fiduciary standard, I can only conclude that CFA Director Barbara Roper – a proponent of the fiduciary standard – hopes her organization’s survey will prompt individual investors to come forward baring all bad news about the services provided by broker-dealers and their registered representatives, most of whom operate under a suitability standard.

Many NAIFA members who serve as advisors are held to such a standard, and we applaud the DOL and SEC for their deliberate approach in determining whether to impose a uniform fiduciary standard on broker-dealers and their registered representatives. NAIFA believes appropriate regulation is crucial to preserving the integrity of the financial services industry, but it must be smart and intelligent regulation. A fiduciary rule that would endanger the business model that has allowed NAIFA members to successfully help their middle-market investor clients for decades would very possibly harm the very people it is designed to protect.

Suitability, as enforced by FINRA, is a very robust, rules-based standard. Registered reps must comply with regulations covering nearly every aspect of their businesses, from how they communicate with clients, to how they keep and maintain records. Members who are registered representatives tend to build long-term relationships by helping clients plan and protect their financial security on an ongoing basis. They also rely on referrals from existing clients to sign on new clients. A registered rep who fails to look out for his or her clients’ interests is not likely to stay in business for long. NAIFA’s report, “Securing America’s Financial Future,” tells their story in their own words.

As for the stories collected by the CFA, I can only hope that CFA will disclose all stories from investors regardless of the standard of care under which their advisor operates. As the Journal reports, CFA so far has received only one response with contact information, perhaps a reflection of current studies that show most consumers are generally satisfied with the services provided by their financial advisor. In my 20 years in this business, I believe that the vast majority of financial advisors, no matter what their standard of care, are honest, hard-working professionals committed to providing financial security for all of America’s businesses and households.


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