NAIFA Submits Comments to SEC on Advisor Standards of Conduct

NAIFA has responded to a request by the Securities and Exchange Commission for information on standards of conduct for investment advisors and broker-dealers by submitting a detailed comment letter.
In the letter, NAIFA encouraged the SEC to take the lead in developing and implementing “reasonable, effective, and harmonized standards and compliance requirements” for advisors and for other agencies, such as the Department of Labor, to work with the SEC.
NAIFA recommends that the SEC develop a principles-based “best-interest” regime that:
  • Defines and imposes a best interest standard of conduct that puts clients’ interests above firms’ and advisors’ interests when investment recommendations are given, and allows for the sale/recommendation of diverse products under compensation arrangements that make sense for lower and middle-market investors;
  • Contains clear disclosure obligations, including disclosure of all material conflicts of interest, types of compensation involved, and the best interest standard to which the advisor must adhere;
  • Prohibits misleading statements to investors;
  • Ensures that overall compensation for financial professionals is reasonable; and
  • Utilizes existing federal enforcement mechanisms, rather than the private plaintiffs’ bar and state courts to enforce and interpret the new regime.
  • Posted August 31, 2017 IN

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