IAA Responds to SEC Request for Comment on Information Providers Acting as Investment Advisers

August 16, 2022

---

The IAA recently submitted a comment letter in response to the SEC’s request for comment on when index providers, model portfolio providers, and pricing services (together, Information Providers) may be acting as investment advisers. The IAA appreciates the SEC’s efforts in seeking to better understand Information Providers and the impact of their use on investors.

Information Providers play an important and valuable role in the services investment advisers provide to their clients, and we recommend that the SEC ensure that any action it takes does not result in increased costs and burdens that would create barriers to entry for or cause Information Providers to exit the market. In addition, we emphasize in our letter that the fiduciary relationship under the Investment Advisers Act exists between an investment adviser and its direct clients. The SEC should not impose a fiduciary duty on an Information Provider with respect to an investment adviser’s clients when that Information Provider has no relationship with and typically does not even know the identity of the adviser’s clients.

Our letter also offers several general recommendations that we believe would further the SEC’s objectives with respect to its analysis of the role of Information Providers. Specifically, we recommend that the SEC:

• Leverage existing requirements under the Advisers Act to ensure appropriate disclosure to investors;
• Conduct a thorough cost-benefit analysis and consider alternatives;
• Assess whether the Advisers Act regulatory framework fits the business models of Information Providers and would achieve the Commission’s objectives; and
• Clarify treatment of regulatory assets under management in Form ADV.

The full comment letter is available on the IAA website.