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NAIFA Releases Statement on SEC Study on Standard of Care


Sheila Owens
Vice President, Communications & Marketing

Mark Briscoe
Senior Director, Strategic Communications

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FALLS CHURCH, VA (January 21, 2011) — The National Association of Insurance and Financial Advisors’ President Terry Headley, LUTCF, LIC, FSS, issued the following statement on the Securities and Exchange Commission study recommending creation of a common fiduciary standard of care for broker-dealers and investment advisers:

“NAIFA is concerned about the possible adverse impact on middle- and lower-market investors if recommendations in the SEC study are carried out.

“NAIFA has previously expressed concerns similar to those raised by Commissioners Casey and Paredes in their January 21 statement that the SEC study does not ‘adequately recognize the risk that its recommendations could adversely impact investors.’

“NAIFA shares the commissioners' concerns that ‘the Study...does not appropriately account for the potential overall cost of the recommended regulatory actions for broker-dealers, investment advisers, and retail investors. The Study unduly discounts the risk that, as a result of the regulatory burdens imposed by the recommendations on financial professionals, investors may have fewer broker-dealers and investment advisers to choose from, may have access to fewer products and services, and may have to pay more for the services and advice they do receive. Any such results are not in the best interests of investors; nor do they serve to protect them.’

“NAIFA’s fundamental concern is that the potential additional costs and increased potential for liability of applying a ‘one size fits all’ fiduciary standard of care to the broker-dealer business model could result in middle- and lower-market investors having less access to the account services and investment advice that are currently being delivered by registered representatives of broker-dealers.

“NAIFA also agrees with comments made by Commissioners Casey and Paredes in their January 21 statement indicating that the study fails to adequately justify or support the SEC staff recommendation that the SEC propose the adoption of a ‘new uniform fiduciary duty standard and harmonization of two disparate regulatory regimes.’”

About NAIFA: NAIFA comprises nearly 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.