Investors, Including Seniors, Would be Harmed if Securities and Insurance Industry Opposition to a Fiduciary Duty for Investment Advice Prevails
WASHINGTON, DC (February 3, 2010) – Leading consumer and investor advocates today urged the Senate Banking Committee to stand strong in the face of a massive lobbying effort to distort the benefits of requiring all financial professionals who provide investment advice to adhere to the high fiduciary duty standards of the Investment Advisers Act.
AARP, Consumer Federation of America, Fund Democracy and the North American Securities Administrators Association, in a letter to Senate Banking Committee Chairman Christopher Dodd and Ranking Member Richard Shelby, described how the fiduciary requirement is needed to protect investors from pervasive abuses and denounced industry efforts to weaken the strong investor friendly language originally proposed by Sen. Dodd to eliminate the broker-dealer exclusion from the Investment Advisers Act. These efforts have caused significant concern for older investors and their financial security.
The proposal, contained in Section 913 of the “Restoring American Financial Stability Act of 2009,” is under attack by some members of the broker-dealer and insurance industries whose questionable sales practices would be more difficult to maintain under the fiduciary duty and disclosure obligations imposed under the Investment Advisers Act.
AARP, CFA, Fund Democracy and NASAA urged Committee members to resist calls to eliminate Section 913 entirely, as some in the securities and insurance industry have suggested, or to water down its protections by replacing it with a new, lowest common denominator “fiduciary duty lite” as advocated by many in the brokerage industry. “Weakening the legislation in this way would harm all investors, but the vulnerable senior population would be hit the hardest,” the letter said.
Retirees and those approaching retirement have been particularly hard hit as the financial crisis erodes retirement savings at a point in their lives when they have little if any opportunity to recover those savings. “The ‘Restoring America’s Financial Stability Act’ includes important provisions to ensure that older investors are not further victimized by investment frauds and abuses. We urge you to stand up for vulnerable seniors by standing up to industry groups seeking to weaken these vital investor protections,” the letter said.
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For More Information:
Alejandra S. Owens
Media Relations Manager, AARP, 202-434-2573
Jack Gillis
Director of Public Affairs, Consumer Federation of America, 202-431-9400
Mercer Bullard
President and Founder, Fund Democracy, 662-915-6835
Bob Webster
Director of Communications, NASAA, 202-737-0900
