WT Wealth Management

The CFA Institute Recommends Enhancements to the SEC's Investor Best Interest Proposal

The CFA Institute, the premier global association for investment management professionals, recently delivered the following communication to its membership about investor advocacy efforts it has been pursuing with the SEC. At WT Wealth Management, we believe the CFA Institute's recommended enhancements to the SEC's Investor Best Interest Proposal will help protect the clients of financial services firms and fully support their recommendations. At WT, we always put our client's interests first. As Mr. Paul Smith, CFA (CEO of CFA Institute) concludes in his message below, “It is time we measure up as an industry." This proposal is a significant step in that direction.

To learn more about this proposal please read the brief summary from Mr. Smith below.




On 7 August, we submitted comments on the long-awaited upgrades and preventive steps proposed by the US SEC to reduce mis-selling of financial products and conflicted treatment of retail investors. We commend the SEC for moving the needle on an issue that has taken decades to address: broker sales and investor protection.

The centerpiece of our comments concerns the SEC's new Regulation Best Interest proposal. Going forward, we believe that brokers must be clear that they are salespeople representing their firms. Brokers should not be permitted to use the title of financial “advisor” unless they are registered as an investment adviser or overseen by one. This would address what has been an endlessly confusing and often misleading issue to investors. More importantly, brokers must take careful steps to ensure they are recommending quality, cost-effective financial products to investors that are fully suitable to their financial circumstances and risk appetites.

Of critical importance in the SEC plan is the objective of reducing mis-selling to the public. In our recommendations for improving the proposal, we make clear our support of obligations that brokers fully disclose sales conflicts and avoid or mitigate those conflicts where possible. We've done our best to frame those conflicts and suggest ways to mitigate their effects on investors. Without these new rules and the important changes we are recommending, we estimate the potential loss to retirement savers from broker mis-selling could top $22 billion annually, based on previous estimates by the Department of Labor.

We thank the SEC for taking on this long overdue examination of financial service sales practices. It is time we measure up as an industry.

Sincerely,


Paul Smith, CFA
CEO and President, CFA Institute



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WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale and Sedona, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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