No Progress? 2011 Ends With The Same Regulatory Questions Advisors Were Facing 12 Months Ago

Thursday, December 29, 2011 15:37
No Progress? 2011 Ends With The Same Regulatory Questions Advisors Were Facing 12 Months Ago

Tags: Dodd-Frank | SRO

SEC-registered advisors are closing out 2011 in almost exactly the same fundamental position as they started it: with minimum clarity on who will regulate them in the future.


In December 2010, the Financial Planning Coalition was begging the SEC to keep advisory firms under its supervisory umbrella.


Twelve months later, no change. We still don't know whether the SEC will unload its RIA monitoring responsibilities to a self-regulatory organization -- probably FINRA, at this point -- or come up with another solution.


All advisors really know at this point is that compliance in the future will almost certainly be expensive. And you knew that last year.


The rationale for this, of course, was that the SEC didn't have enough money in its budget to cover its additional responsibilities. Nothing has changed.


Meanwhile, trade groups representing advisors who make most of their money selling annuities were just as strenuously protesting efforts to extend the fiduciary standard to everyone in the industry who promises to provide "advice."


Twelve months later, no change. It looks like the universal fiduciary standard will eventually apply in watered-down form to those who make their living selling commission products.


If anything, Congress seems eager to come up with carve-out exemptions for a wide range of industry operators to keep doing exactly what they're doing.


One thing is clear. Even though the big stories didn't budge after the last 12 months of watching, worrying, hoping, and behind-the-scenes lobbying, we're all a year older.


That time wasn't wasted. Advisors who stuck to the day-to-day knitting and kept their clients on track are at least no worse off than they were back in late 2010.


At least, I hope so. If not, we have a lot more to worry about.

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