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Petition to Clarify NJ Proposed Fiduciary Rule (Proposal Number: PRN 2019-044; Proposed New Rule N.J.A.C. 13:47A-6.4)

We, the undersigned members of the community of investment professionals, who are located and/or do business in New Jersey, join our voices with ADISA (the Alternative & Direct Investment Securities Association) to respectfully request that the State of New Jersey Bureau of Securities consider the comments and suggestions expressed in this submission regarding Proposed New Rule N.J.A.C. 13:47A-6.4 and adopt such suggestions in the Final Rule.

Characteristics of Alternative Investments include: 

  • A diversity of non-traded and non-marketable products; 
  • The non-regular basis of most product recommendations;
  • The relationship between buyers and their financial professionals with respect to these securities, which is generally more infrequent than on-going in nature;
  • The crucial role of alternative investments in retail portfolios: 78% of “millennials” and 70% of “Gen X” savers endorse having access to alternatives for their investment accounts; 1
  • The significant positive impact on investor rates of return when incorporating alternatives. 2

We agree with the need to set appropriate standards around advice provided by all financial professionals, whether episodic or on-going in nature. We further recognize the goal of NJ investors to maintain diverse portfolios that will aid them in meeting their goals. 

Therefore, we urge the State to add greater clarity to language referring to the "best of reasonably available options" contained in Subsection (b)2i and the “best of the reasonably available fee options” in Subsection (b)3 of the Proposed Rule.  This will help ensure that broker-dealers and their registered representatives who recommend alternatives: 

  • Can align their conduct regarding alternative investments with the Rule, given the challenges involved in comparing investment products made available by any single broker-dealer; and
  • Can satisfy their duty of due care.

"Non-traded" or non-marketable investment products are distinct from their publicly-traded counterparts in many respects, including cost, liquidity and complexity.  The duty of care owed by financial professionals to their customers must be capable of being maintained in a manner that is consistent with the unique nature of alternative investments. The State should make this point unambiguous in the Final Rule. 

Thank you for considering our perspective. 


1. Natixis Global Asset Management Survey, http://durableportfolios.com 2014. 

2. From 1999-2009 the generic “balanced” (i.e., 60% equity/40% bond) portfolio after fees returned zero percent (0%), while the Yale, Harvard, and Stanford portfolios with alternatives generated returns ranging from 135% to 198% in total (Wildemuth, D. Wise money: How the Smart Money Invests. McGraw Hill, 2012, pp. 64-65).

Petition Signers (21)
Jun 13th, 2019
Debra F. from Spring Lake, NJ signed.
Jun 11th, 2019
Perry S. from Montclair, NJ signed.
Jun 11th, 2019
Edie K. from Princeton Junction, NJ signed.
Jun 11th, 2019
Ambrose C. from Fort Lee, NJ signed.
Jun 11th, 2019
Thomas F. from Blackwood, NJ signed.
Jun 11th, 2019
Jorge s. from Raritan, NJ signed.
Jun 11th, 2019
Romil B. from Livingston, NJ signed.
Jun 10th, 2019
Stephen K. from Flemington, NJ signed.
Jun 10th, 2019
John F. from Kerrville, TX writes:
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Investment advisors must be able to deliver what clients want and need in a matter which is suitable to the investor. Every investor is different - thinks differently, acts differently, has different goals/aspirations, comes from different backgrounds, has situations which effect their lives differently - and as such, advisors need a broad array of capabilities to achieve the myriad of investor desires in relation to their goal and suitability. People want more freedom of choice for their investments.
Jun 10th, 2019
Brad B. from Randolph, NJ signed.

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