Market Regulation

CFA Urges Chairman Gensler to Act Quickly to Fix SEC’s Advice Standards

In keeping with a 20-year tradition, CFA Director of Investor Protection Barbara Roper greeted newly confirmed SEC Chairman Gary Gensler with a letter urging him to act quickly and boldly to strengthen the standards that apply to broker-dealers and investment advisers. The letter details specific steps the SEC can and should take to clarify key components of the existing standards, fix weaknesses in those standards, and study issues related to conflicts of interest and disclosure effectiveness in order to lay the groundwork for further rulemaking.

The bad news, Roper wrote, is that Regulation Best Interest, the Investment Advisers Act fiduciary guidance, and the Customer Relationship Summary all have serious deficiencies. “The good news is that we do not believe it will be necessary to scrap these rules and start from scratch in order to deliver the protections investors expect and deserve when they turn to financial professionals for help with their investments,” she added. “Despite their many flaws, these regulations can provide a framework on which to build a more robust regulatory approach.”

“For decades, the Commission has failed to live up to its central investor protection mission when it comes to the regulation of broker-dealers and investment advisers,” Roper concluded. “You have an opportunity to correct that failure, and we urge you to do so. It is, in CFA’s view, the most important step you can and should take to protect the interests of millions of financially unsophisticated individuals who turn to the markets to save for retirement or other important life goals and desperately need advice they can trust to navigate those decisions. CFA stands ready to do whatever we can to assist you in this effort.”