Connecticut Seal

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House of Representatives

File No. 802

General Assembly

 

January Session, 2017

(Reprint of File No. 14)

Substitute House Bill No. 6992

 

As Amended by House Amendment

Schedule "A"

Approved by the Legislative Commissioner

May 26, 2017

AN ACT PROTECTING THE INTERESTS OF CONSUMERS DOING BUSINESS WITH FINANCIAL PLANNERS.

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

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 where such activity is not otherwise regulated by state or federal law.

(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 as described in section 36b-4 of the general statutes.

(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.

Sec. 2. (NEW) (Effective from passage) (a) To the extent practicable, the Banking Commissioner shall provide on the department's Internet web site links to educational materials on (1) financial planning and other designations, including associated prerequisites, and (2) information on requirements for investment advisers pursuant to chapter 672a of the general statutes. The Banking Commissioner 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.

(b) The Department of Banking shall share the information provided on the department's Internet web site pursuant to subsection (a) of this section with the Department of Consumer Protection. The Department of Consumer Protection shall provide such shared information on its own department's Internet web site.

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

Section 1

from passage

New section

Sec. 2

from passage

New section

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

The bill makes various changes affecting financial planners that have no fiscal impact. The bill also requires the Department of Banking (DOB) and the Department of Consumer Protection (DCP) to post certain information regarding financial planners and consumers' rights and results in no fiscal impact as DOB and DCP update and alter their agency websites as a normal course of operations.

House “A” strikes the underlying bill and replaces it with language that has the fiscal impact described above.

The Out Years

State Impact: None

Municipal Impact: None

OLR Bill Analysis

sHB 6992 (as amended by House "A")*

AN ACT PROTECTING THE INTERESTS OF CONSUMERS DOING BUSINESS WITH FINANCIAL PLANNERS.

SUMMARY

This bill makes various changes affecting financial planners. It:

*House Amendment “A” replaces the original bill (File 14) and (1) modifies the definition of financial planner; (2) requires DOB, in addition to DCP, to post specified information on its department website; and (3) requires DOB to share the information it posts online with DCP.

ADVERTISING REQUIREMENTS

The bill prohibits financial planners from using, in connection with an agreement to provide financial planning or investment advice for compensation, a certificate, professional designation, or advertisement expressing or implying special training, education, or experience in advising or serving senior citizens without meeting certain education requirements (see BACKGROUND). Existing state law already imposes this prohibition on individuals involved in securities transactions.

Under the bill, a “financial planner” is a person offering individualized financial planning or investment advice to a consumer for compensation who is not otherwise regulated by state or federal law.

DOB AND DCP WEBSITES

The bill requires the DOB commissioner, to the extent practicable, to post on the department's website links to educational materials on (1) financial planning and other designations, including associated prerequisites, and (2) requirements for investment advisers under the Connecticut Uniform Securities Act.

The banking commissioner must also include on the website information about a consumer's right to ask financial planners or other financial planning professionals to disclose fees and compensation as required under state and federal law.

The bill also requires the banking department to share the information it posts on its website with DCP, which must then post the information on its website.

BACKGROUND

Educational Requirements for Individuals Advertising Experience with Senior Citizens

By law, individuals offering, selling, or purchasing securities are prohibited, in connection with an agreement to provide financial planning or investment advice for compensation, from using a certificate, professional designation, or form of advertising expressing or implying special training, education, or experience in advising or serving senior citizens unless the individual has met certain educational criteria. They must receive a certificate, title, or designation by completing a course of study that:

Related State Laws

Existing law regulates the conduct of many financial advisors. For example, the Connecticut Uniform Securities Act (CGS 36b-2 et seq.) generally prohibits, in connection with the offer, sale, or purchase of a security, individuals from (1) engaging in fraud or deceit, (2) making untrue or misleading statements, or (3) engaging in a dishonest or unethical practice. It also requires “investment advisors” to disclose certain compensation and fee information. Investment advisors advise others regarding securities transactions for compensation and as part of a regular business.

Additionally, Insurance Department regulations prohibit insurance producers (i.e., agents) from using senior citizen-specific certifications or professional designations to mislead a purchaser when (1) soliciting, selling, or purchasing life insurance or annuities; (2) providing advice about purchasing or selling life insurance or annuities; or (3) issuing reports or analyses on life insurance or annuities (Conn. Agencies Regs. 38a-432b-2).

COMMITTEE ACTION

Aging Committee

Joint Favorable

Yea

13

Nay

0

(02/14/2017)

Banking Committee

Joint Favorable

Yea

9

Nay

7

(03/21/2017)

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