CT
Connecticut Senate Bill SB00265

Connecticut 2016 Regular Session

Connecticut Senate Bill SB00265 Compare Versions

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1-General Assembly Substitute Bill No. 265
2-February Session, 2016 *_____SB00265AGE___030916____*
1+General Assembly Raised Bill No. 265
2+February Session, 2016 LCO No. 2039
3+ *02039_______AGE*
4+Referred to Committee on AGING
5+Introduced by:
6+(AGE)
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48 General Assembly
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6-Substitute Bill No. 265
10+Raised Bill No. 265
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812 February Session, 2016
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10-*_____SB00265AGE___030916____*
14+LCO No. 2039
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12-AN ACT PROTECTING THE INTERESTS OF CONSUMERS DOING BUSINESS WITH FINANCIAL PLANNERS.
16+*02039_______AGE*
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18+Referred to Committee on AGING
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20+Introduced by:
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22+(AGE)
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24+AN ACT CONCERNING THE PROTECTION OF CONSUMERS WHO RECEIVE INVESTMENT ADVICE FROM FINANCIAL ADVISORS.
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1426 Be it enacted by the Senate and House of Representatives in General Assembly convened:
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16-Section 1. (NEW) (Effective from passage) (a) For purposes of this section and section 2 of this act, (1) "fiduciary duty" means a duty to act with prudence in the best interests of a consumer with undivided loyalty to such consumer, and (2) "financial planner" means a person offering individualized financial planning or investment advice to a consumer for compensation whose advice to the consumer is not otherwise regulated under the Employee Retirement Income Security Act of 1974, the Investment Advisers Act of 1940 or the Securities Exchange Act of 1934, as said acts are amended from time to time.
28+Section 1. (NEW) (Effective July 1, 2016) (a) For purposes of this section, (1) "financial advisor" means a person, whether or not registered or required to be registered under sections 36b-2 to 36b-34, inclusive, of the general statutes, who renders investment advice to an investor in this state for compensation by (A) providing investment or investment management recommendations or appraisals, and (B) acting pursuant to an agreement with the investor that the advice is individualized, or specifically directed, to the investor for consideration in making investment or management decisions; and (2) "fiduciary duty" means a duty to act with prudence and undivided loyalty on behalf of an investor.
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18-(b) No financial planner shall, in connection with an agreement with a consumer to provide financial planning or investment advice for compensation, use a certificate, professional designation or form of advertising expressing or implying that such person has special training, education or experience in advising or serving senior citizens, unless such person has obtained a certificate, title or designation in accordance with the provisions of section 36b-4 of the general statutes.
30+(b) Prior to entering into an agreement with an investor in this state, a financial advisor shall provide a signed written statement to the investor containing the following information:
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20-(c) A financial planner shall disclose to a consumer, upon request, whether or not such financial planner has a fiduciary duty to such consumer for each recommendation such financial planner makes to such consumer.
32+(1) Whether such advisor has a fiduciary duty to the investor, whether such duty applies to all investment recommendations such advisor makes to such investor and, if such financial advisor does not have a fiduciary duty to the investor, a description of the duty the financial advisor has to the investor;
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22-Sec. 2. (NEW) (Effective from passage) The Commissioner of Consumer Protection, in consultation with the Commissioner of Banking, shall provide on the Internet web site of the Department of Consumer Protection, a list of (1) financial planners and other financial planning professionals doing business in the state who are required to act in a consumer's best interests pursuant to their certification by the Certified Financial Planner Board of Standards, and (2) investment advisers who are required to act in a consumer's best interests pursuant to chapter 672a of the general statutes. The Commissioner of Consumer Protection shall also include on the department's Internet web site information concerning a consumer's right to ask for disclosure from financial planners or other financial planning professionals about fees and compensation as required under applicable state and federal law.
34+(2) The compensation the financial advisor expects to receive from the investor, or any other source, in connection with the investment advice, including, but not limited to, (A) up-front charges to the investor, (B) commission percentages on investment products the financial advisor may recommend, and (C) cash bonuses or other incentives the financial advisor may receive for selling specific products;
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24-Sec. 3. (NEW) (Effective from passage) If any provision of sections 1 and 2 of this act is held invalid, such invalidity shall not affect other provisions of said sections, in accordance with section 1-3 of the general statutes.
36+(3) Any fees related to investment products, including, but not limited to, (A) annual marketing or distribution fees on a mutual fund, (B) trading fees, if passed on to the investor, (C) early termination or withdrawal fees for long-term investments, and (D) administrative or management fees;
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38+(4) Whether such advisor is currently licensed or registered to give such advice pursuant to state or federal law;
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40+(5) Any educational degrees or certifications held by such advisor, the institution or organization that conferred such degrees or certifications and the date such degrees or certifications were conferred; and
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42+(6) Any actual or potential conflicts of interest such advisor may have in rendering such advice.
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44+(c) A financial advisor shall provide a follow-up signed written statement to an investor at least once annually containing updated post-transaction compensation and fee information as described in subsection (b) of this section. An estimate of compensation or fees provided pursuant to subsection (b) of this section or this subsection shall be expressed as a monetary amount where reasonably possible but may be expressed as a formula or percentage where a monetary amount cannot be reasonably calculated.
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46+(d) A financial advisor who deliberately deceives or misleads an investor in the statements required pursuant to subsections (b) and (c) of this section shall be subject to the rights and remedies of consumers as provided in chapter 735a of the general statutes, provided this subsection shall not apply to investment advice regulated under the Employee Retirement Income Security Act or pursuant to chapter 672a of the general statutes.
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48+(e) If any provision of this section is held invalid, the invalidity does not affect the validity of other provisions or applications of this section which can be given effect without the invalid provision.
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2953 This act shall take effect as follows and shall amend the following sections:
30-Section 1 from passage New section
31-Sec. 2 from passage New section
32-Sec. 3 from passage New section
54+Section 1 July 1, 2016 New section
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3456 This act shall take effect as follows and shall amend the following sections:
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3658 Section 1
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38-from passage
60+July 1, 2016
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4062 New section
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42-Sec. 2
64+Statement of Purpose:
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44-from passage
66+To provide protections for consumers who receive investment advice from financial advisors.
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46-New section
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48-Sec. 3
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50-from passage
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52-New section
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54-Statement of Legislative Commissioners:
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56-In Section 1(a)(2), "Employee Retirement Income Security Act" was changed to "Employee Retirement Income Security Act of 1974" for clarity and statutory consistency; in Section 1(c), "such person" was changed to "such financial planner" for clarity and internal consistency; and, in Section 2, "financial planning professionals" was changed to "financial planners and other financial planning professionals" and "financial planners or other financial advisors" was changed to "financial planners or other financial planning professionals" for internal consistency.
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60-AGE Joint Favorable Subst.
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62-AGE
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64-Joint Favorable Subst.
68+[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]