Should the Securities and Exchange Commission hold investment advisors and broker/dealers to the same standard of fiduciary duty? While most industry groups are opposed to the idea, at least one has now weighed in with a resounding endorsement.
In a letter to the SEC, the Financial Planning Coalition said it would oppose any efforts to weaken the fiduciary standard. It urged the regulatory body to adopt a uniform fiduciary duty standard that would apply to both broker/dealers and investment advisers when providing personalized investment advice to retail customers.
"This standard should be based upon the core principle that … a financial adviser (however registered) always must act in the best interests of those customers," the letter said. "The SEC should adopt this uniform fiduciary standard immediately."
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The letter also said that while SEC's focus on disclosure of conflicts of interests is beneficial, it should not be the end of an advisor's fiduciary duty. The SEC, it said, should address harmonization of investment adviser and broker/dealer rules after it adopts a uniform fiduciary standard of care: the two issues are conceptually distinct and should not be linked.
The coalition accompanied its argument with results from a survey, conducted by the Aité Group, of 498 registered representatives and registered investment advisors who work for wealth management firms.
The survey found that a uniform fiduciary standard on broker/dealers will have little effect on the availability of advice to customers, and that most broker/dealers are already operating in the best interests of their clients. These advisors "experience stronger asset growth, stronger revenue growth, and obtain a greater share of client assets than those that provide services primarily under a non-fiduciary model," its letter said.
The research also showed that the more stringent fiduciary standard had little impact on advisors' ability to serve "mass market" clients and doesn't lead to increased costs or decreased services.
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