New Jersey put the brakes on its all-encompassing fiduciary duty proposal Monday, while announcing an all-day public hearing July 17.
The hearing will take place from 9:30 a.m. to 4:30 p.m. at the Division of Consumer Affairs, 124 Halsey St., 6th floor, Newark, N.J. The hearing means public comment on the proposal is extended from June 14 until after the hearing.
The rule proposed by the New Jersey Bureau of Securities would require all financial advisors registered in the state to act as fiduciaries, making New Jersey one of the first states to propose a uniform fiduciary standard for all financial services professionals.
The rule would cover recommendations on investments; opening or transferring assets into any kind of account; and the purchase, sale or exchange of any security. A broker or advisor must make “reasonable inquiry” in the best interest of their client, and any recommendations offered cannot be made with regard to a financial interest of the broker, advisor or any other third party.
Industry trade associations say the rule goes too far and will result in no financial advice for the at-risk populations who need it most.
With the National Association of Insurance Commissioners and the Securities and Exchange Commission both in the latter stages of overarching rules, the Insured Retirement Institute is lobbying states to refrain from pushing rules through for now.
In comments filed with the New Jersey Securities Bureau, IRI noted the recently finalized Regulation Best Interest announced last week by the SEC will address the concerns underlying the state’s proposed regulation. IRI also included recommendations for significant adjustments to the New Jersey proposal if the Bureau refused to delay its action.
“Our initial reaction is that Regulation Best Interest represents a substantial strengthening of investor protection compared to existing law in a manner that is consistent with the principle that financial professionals should be required to act in their clients’ best interest when providing personalized investment advice, while also preserving investor choice and access to the products and services they need to achieve their financial goals,” said Jason Berkowitz, IRI chief legal and regulatory affairs officer.
IRI’s comments on the New Jersey proposed regulation stated that the Bureau now has the opportunity assess the SEC’s approach in the real world – and how the state’s proposed rule would “fit within the broader tapestry of regulations governing the conduct of financial professionals – before deciding whether and how to proceed.”
Berkowitz added, “We respectfully urge the Bureau to take advantage of the opportunity to see how well the final SEC rules will actually address your concerns before considering whether further regulatory action is needed to protect investors.”
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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