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NAIFA Responds to Questions, Reaffirms Support for Senate Bill Provision on Fiduciary Duty

Contact:

Lorri Ragan, Acting VP, Communications & Marketing
703-770-8203

FALLS CHURCH, VA (May 12, 2010) — The National Association of Insurance and Financial Advisors (NAIFA) wishes to respond to questions that have arisen following NAIFA’s recent alert to Members of the Senate regarding Senator Akaka’s amendment #3889. In the alert, NAIFA cited SEC statistics that clearly show that investment advisers who are held to a fiduciary duty are inspected significantly less frequently than broker-dealers who are held to a suitability standard of care. The alert also quoted SEC Commissioner Luis Aguilar, “No standard, not even the fiduciary standard, has teeth unless it is properly implemented and enforced.” Commissioner Aguilar’s quote was used to illustrate NAIFA’s concerns about the enforcement of a fiduciary standard; it was not intended to characterize Commissioner Aguilar’s position on the broader question of whether to extend a fiduciary duty standard to broker-dealers.

NAIFA remains fully committed to ensuring that investors receive the best system of protection. Section 913 of the Restoring American Financial Stability Act specifically calls for a comprehensive review of the regulation, examination, and enforcement resources dedicated to broker-dealers compared and contrasted in detail with that of investment advisers. It further calls for a comparison and contrast of where the regulation and oversight of brokers-dealers provides greater protection for investors and where the regulation and oversight of investment advisers provides greater protection. Based on the outcome of the analysis, Section 913 requires the SEC to write rules to address gaps in regulation that are found to be harmful to investors.

NAIFA therefore fully supports the objective approach to this issue that is included in the Senate bill. We continue to oppose Senator Akaka’s amendment and any other amendments that would strip the balanced approach to this issue from the bill.

About NAIFA: NAIFA comprises more than 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The Association’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.