A coalition of industry groups is supporting calls from the Treasury department for all financial planning and advisory professionals to adhere to a fiduciary standard of care when advising clients, the Certified Financial Planner Board of Standards said yesterday.

The group, comprised of the CFP Board, the Financial Planning Association, the National Association of Personal Financial Planners, the Investment Adviser Association, the North American Securities Administrators Association, and Fund Democracy, a nonprofit advocacy group for mutual fund shareholders, wrote to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee. “The highest legal standard—a fiduciary duty—should apply to all who give financial advice to clients,” the group said.  

On July 10, the Treasury Department presented Congress with draft legislation called the Investor Protection Act of 2009, based on President Barack Obama’s white paper calling for reforms in the financial services sector. “The Administration's legislation would give the Securities and Exchange Commission authority to require a fiduciary duty for any broker, dealer or investment advisor who gives investment advice about securities, aligning the standards based on activity, instead of based on legal distinctions that are no longer meaningful,” the Treasury department said.

The Treasury also said it wants the SEC to be able to ban compensation that would encourage intermediaries to steer investors into products that are profitable for them, but not in their clients’ best interest.