Connecticut Seal

General Assembly


Raised Bill No. 265

February Session, 2016


LCO No. 2039



Referred to Committee on AGING


Introduced by:





Be it enacted by the Senate and House of Representatives in General Assembly convened:

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.

(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:

(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;

(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;

(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;

(4) Whether such advisor is currently licensed or registered to give such advice pursuant to state or federal law;

(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

(6) Any actual or potential conflicts of interest such advisor may have in rendering such advice.

(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.

(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.

(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.

This act shall take effect as follows and shall amend the following sections:

Section 1

July 1, 2016

New section

Statement of Purpose:

To provide protections for consumers who receive investment advice from financial advisors.

[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.]