SAMPLELETTERFORSTATE AARP CHAPTERS TO SEND TO SENATORS
March 3, 2010
The Honorable [Name of Senator]
Washington, DC20510
Dear Senator [Name of Senator]:
On behalf of the [number] members of the [State] chapter of the AARP, I am writing to express our support for the strong fiduciary duty requirement for broker-dealers providing investment advice contained in Section 913 of the “Restoring American Financial Stability Act of 2009.
Imposing this responsibility on financial professionals giving investment advice would enhance protections against abusive sales practices that disproportionately affect older Americans. The elimination of the broker-dealer exclusion from the Investment Advisers Act provides much needed tools to combat some of the most pervasive abuses that targetolder investors in [State]. For example, they would benefit greatly by up-front disclosure of the agent’s conflicts of interest that may bias a recommendation, disclosure of commissions and fees for selling a product such as a variable annuity, and the legal obligation to act in the client’s best interest, not merely what is “suitable.”
An estimated five million older Americans become victims of financial fraud and abuse each year.[1] In part, this reflects the fact that nearly one-third of all U.S. investors are between the ages of 50 and 64. Moreover, the transition from work to retirement is a particularly vulnerable time, as individuals must switch from a strategy based on accumulating assets for future retirement to one of investing for income during retirement. When these older investors are defrauded or otherwise taken advantage of, the results are particularly devastating. Since these victims are generally beyond or near the end of their earning years they have little or no ability to rebuild their retirement funds.
Section 913 Regulation of Brokers, Dealers and Investment Advisers
Section 913 has been under attack througha misleading campaign by the insurance and broker-dealer industries, some of whose sales practices would be more difficult to maintain under the fiduciary duty and disclosure obligations imposed under the Investment Advisers Act.
On behalf of seniors in [State], we urge you to oppose the effort to eliminate the section entirely and replace it with an industry supported study. This study is unnecessary and redundant. The issue of fiduciary duty already has been studied many times by the SEC, the GAO and private entities. A study would take nearly two years to complete and leave older investors open to fraud at a time when their nest egg is most at risk. Weakening the legislation in this way would harm all investors, but the vulnerable senior population would be hit the hardest.
Our retirees already have been financially devastated during the economic crisis. The “Restoring America’s Financial Stability Act,” released in November, included important provisions to ensure that older investors are not further victimized by fraud and abuses.
On behalf of the estimated five million older Americans who become victims of financial fraud and abuse each year, we strongly urge you to support restoring Section 913, which requires broker dealers giving investment advice to be subject to a strong fiduciary dutystandard provision, to the financial services regulatory reform bill.
Sincerely,
[1] Securities and Exchange Commission, FINRA, and North American Securities Administrators Association, Investor Alert, Investment Products and Sales Practices Commonly Used to Defraud Seniors: Stories from the Front Line.