Washington Report

June 12th, 2019 by Jim Allen

Last week I had the opportunity to travel to Washington DC to meet with members of Congress on behalf of the Financial Planning Association of CA and also advocating for the clients we serve. We spent two days meeting with the offices of Senators and Representatives from California. So here is a recap of some of the important items we discussed during these meetings.

The “SECURE” Act: The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) has been passed in the House of Representatives and a similar bill is being evaluated in the Senate. The bill has strong bi-partisan support and is likely to pass sometime later this year. The SECURE Act has several beneficial provisions for consumers including changing the required minimum distribution age from 70 ½ to 72 and allowing people over 70 ½ who are still working to continue contributing to their IRAs. The SECURE Act would be beneficial for people saving for retirement and we will keep you posted on any further developments.

Regulation “BI”: These are actually new regulations that were approved by Securities & Exchange Commission (SEC) last week. The new regulations will require brokers to act in the “best interest” of their clients and will also require all financial advisors to provide additional disclosures. While an improvement over the much weaker “suitability” standard that brokers had to comply with, unfortunately the regulations do not impose a fiduciary responsibility on brokers and other financial sales people. This means that clients are still going to be confused about the relationship they have with their advisor. Registered Investment Advisors like Anchor Bay Capital always have a fiduciary responsibility to their clients and we must always act with the duties of care, skill, prudence and diligence while placing the client’s interests above the interest of the firm and advisor. Plus, Certified Financial Planner (CFP®) practitioners must also abide by practice standards when providing financial advice in addition to acting as a fiduciary. So, while Regulation BI does require brokers and other non-fiduciary advisors to work towards a client’s best interest, it still doesn’t assure that the financial advisor is doing what is best for the client and likely will just add more confusion as to what hat the advisor is wearing. You should always ask if your financial advisor is acting as a fiduciary and is a Certified Financial Planner®.

Financial Senior Abuse: Another bill that just passed in the House of Representatives and is currently with the Senate is HR 1876 that would require the SEC to set up a task force to evaluate solutions to the ever growing issue of financial abuse of seniors. This issue is also being addressed at the state level and California currently has a bill in the legislature that would require elder abuse reporting by financial advisors. Additional protection for seniors is a very important subject and also points out the need to work with a fiduciary financial advisor who is looking out for the best interests of the client.

As always, we have our fingers on the pulse of the legislative and tax issues that affect our client’s financial lives. We will keep you posted on any future developments on these or other issues.