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Groups Support Eliminating Broker-Dealer Exemption

A consortium of investor groups and investment adviser organizations have co-signed a letter to the sponsors of the Senate bill, Restoring American Financial Stability Act, Senators Dodd and Shelby, in support of the provision in the bill that would eliminate the broker-dealer exclusion from the definition of "investment adviser" in the Investment Advisers Act.  Their primary reason for supporting the provision is to require "all those who offer investment advice to be held to the Investment Advisers Act fiduciary duty to act in the best interests of their clients." 

The letter states that holding broker-dealers to the fiduciary standard would not prohibit them from offering the products and services they currently offer, but simply would hold them to the same standard expected of registered investment advisers.  According to the letter:

For too long, brokers have been free to market themselves as trusted advisers and offer extensive advisory services without having to meet the fiduciary standard appropriate to that role. Section 913 of the “Restoring American Financial Stability Act of 2009” eliminates the legislative loophole that has allowed this dual standard to persist. Investors will only benefit, however, if Congress resists efforts to scale back and water down critical protections provided by the legislation, efforts that have been advanced through a campaign of misinformation and mischaracterization. We urge you to stand up for investors by standing up to those who would undermine these important investor protections.

The letter is cosigned by:

  • Consumer Federation of America
  • Certified Financial Planner Board of Standards, Inc.
  • Fund Democracy
  • Financial Planning Association
  • National Association of Person Financial Advisors
  • Investment Adviser Association

The full text of the consortium's January 7, 2010 letter is available at: