The Financial Services Institute (FSI) sent a letter this week to the Securities and Exchange Commission with feedback regarding a uniform standard of care for broker-dealers and investment advisors.
“We appreciate the opportunity to provide the SEC with information as they explore developing a uniform best interest standard for investment advice,” FSI President and CEO Dale Brown wrote. “FSI has supported the development of a uniform best interest standard of care since 2009 – before Dodd-Frank became law. A uniform standard of care for all types of financial advice is critical in order for investors to know that whether they are saving for a home, their children’s education or for a dignified retirement, their financial advisor is working in their best interest. It is equally important that a uniform best interest standard preserves investors’ access to a variety of investment products and services.”
Brown said FSI members, who are financial advisors, support a uniform best interest standard of care that is applicable to all financial professionals and is enforced by the SEC.
Acting in a client’s best interest means the advisor must place the interests of their client before their own and avoid conflicts of interests, the FSI chief said. Where conflicts cannot be avoided, FSI recommends having the advisor fill out a disclosure document and post the details on the financial institution’s website.
Further, a best interest standard should not restrict investors’ access to products or investment advice, Brown said.