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2019-09-06 - Vulnerable Adults Signed Into Law
SB496 Mandated Reporter Bill Signed by Governor Newsom
CA SB496 Is now law as it was approved by the State Senate and Assembly and signed by Governor Newsom on September 6, 2019. This is California’s version of the spate of “Vulnerable Adults” bills that have proliferated around the country in the last few years, but it differs from many of the other final bills in two very important respects.
Vulnerable Adults bills will typically create categories of “mandated reporters” who are required to report suspected instances of financial abuse of an older person to authorities in their respective states. SB496 as signed includes a broker dealer or a financial adviser in the current definition of a “mandated reporter.” Any such reporter who “…has observed or has knowledge of..” such an incident, “… that reasonably appears to be financial abuse…” or “who reasonably suspects that abuse… shall report the known or suspected abuse…”
There are ranges of fines and civil penalties that may be applied if signs of abuse are ignored, and the language that has most frequently been used in final versions of these bills indicates that the reporter “may” make such a report – leaving a degree of discretion to the financial professional on the spot. These situations can be highly ambiguous, and no two are exactly alike. A mistaken report, however well-intentioned, would quite possibly change a client relationship forever.
However, SB496 as signed includes “must report” language and mandatory penalties ranging from $1000 to $5000 per incident.
This bill will go into effect January 1st, 2020.
Click on the link to view the full SB496 bill.
2019-09-10 - 529 Tuition Contribution Tax Allowance Sent to Governor's Office
AB211 529 Tuition Contribution Tax Allowance
CA AB211 has been sent to Governor Newsom’s office for his signature. AB211 will allow eligible clients to deduct up to a $5000 contribution (for a single adult, $10,000 for a married couple) to a 529 plan for the purposes of calculating their CA income taxes.
However, AB211 allows the deduction only for the California Scholar Share plan that is sponsored by TIAA – there are no other options. Additionally, there is no advisor-sold option for the 529. Therefore, no compensation will be paid for this recommendation.
Lastly, as it is currently written, there are income limits: $75,000 for a single taxpayer, and $150,000 for a married couple, or taxpayer filing as “Head of Household” so some clients will not qualify for this deduction.
Click on the link to view the full AB211 bill.
Financial Advisor Issue Intelligence Center | from FPA National
Section 913 Fiduciary Standard of Care
- Financial Planning Coalition Submits Comment Letter on SEC RFI on Fiduciary Standard of Care (PDF)
- SEC’s Walter Calls For Uniform Standard of Care
- White Says SEC is Moving on Fiduciary but Other Rules to Come First
Section 914 User Fee Legislation
- Copy of H.R. 1627: The Investment Advisor Improvement Act of 2013 (PDF)
- Congress Ignores Ticking Time Bomb of Investment Fraud
- NASAA Statement on User Fee Legislation
- FPA and Others Oppose SEC Budget Underfunding
DOL Re-proposed Rules on Fiduciary
- Financial Organizations Protest Bill on Fiduciary Definition
- Why Wall Street, Insurers Don’t Want Fiduciary Duty
- Financial Consultants Support Fiduciary Standard for Retirement Investors
Other Key Issues
FPA endorses the Investment Adviser Examination Improvement Act of 2013. This proposed legislation is far more cost effective and equally successful in achieving a reasonable level of SEC examinations.
FPA seeks legislative reform that would require financial service providers who hold themselves out as “financial planners” to meet competency standards and to provide financial planning services at a fiduciary standard of care.
Federal Bills FPA Is Tracking
Federal – HR 2374 – Oppose
Federal – HR 1627 – Support