MADISON HEIGHTS, Mich., July 27, 2015 /PRNewswire/ -- In comments to the Department of Labor, BetterInvesting said the nonprofit organization fully supports the proposed amendment to broaden the definition of those considered a fiduciary under the Employee Retirement Income Security Act, which covers the regulation of employee pension and welfare benefit programs offered by employers.
"It is our belief that the proposed rule and its intent help to better define the term fiduciary and make sure that said fiduciaries are held to the highest standards of conduct when advising those in retirement plans as well as maintaining the best interests of the asset owner in all investment advice," said the BetterInvesting board of directors' Individual Investor Advocacy Committee. "In other words, the rule provides needed protection from paid advisers who put their own interests and compensation above those whom they are advising, creating a huge conflict of interest.
"The impact of this rule should help to assure investors that the advice and recommendations they are given are in their best interest (ethically and) financially, and hence should lead to better investment results over time."
BetterInvesting also recommended that the Securities and Exchange Commission and FINRA establish the appropriate standard of care for brokers and dealers. "Specifically, when recommending a security or strategy to retail investors, broker-dealers [should] be required to ensure that the recommendation is in the 'best interest' of the investor," the IIAC said.
As background, there are two standards of care in the financial industry: suitability and fiduciary. The fiduciary standard requires a financial representative to always act in the best interest of the client, while a suitability standard requires only that an investment product only be suitable for a client's situation.
"Given that most of our membership base owns the type of retirement accounts covered by the proposed rule, we agree that it is a high priority and in the best interest of our membership to support the proposed rule and its intent," the IIAC said.
Members of the IIAC are:
- Robert Brooker
- John Gannon
- Roger Ganser
- Allen Holdsworth
- Julie Werner
- Kamie Zaracki
The association submitted the comments to the Department of Labor after Labor solicited comments to amendment RIN 1210-AB32 to 29 CFR 2510.3-21(c). For more information about the proposal, go to this blog entry at the Department of Labor's website:
BetterInvesting is a national nonprofit organization that has been empowering individual investors since 1951. Founded in Detroit, the association (formerly known as National Association of Investors Corporation) was borne out of the conviction that anyone can become a successful long-term investor by following commonsense investing practices. BetterInvesting has helped more than 5 million people become better, more informed investors by providing webinars, in-person events, easy-to-use online tools for analyzing stocks and mutual funds, a monthly magazine and a community of volunteers and like-minded investors. For more information about BetterInvesting, visit its website at www.betterinvesting.org or call toll free (877) 275-6242.