The battle over the appropriate application of the term “fiduciary” has intensified toward an industry organization, the Securities Industry and Financial Markets Association (SIFMA). The Institute for the Fiduciary Standard, an organization that represents investment advisors, has accused SIFMA of trying to misapply the term in an effort to water down the application to brokers.
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Although the SEC and the Department of Labor are working intently to formulate a universal standard, the Institute says there are still multiple issues to resolve.
SIFMA members claim that most brokers already function as fiduciaries despite the fact that they sell products and services. The Institute states that this application of the term is in conflict with the Dodd-Frank Act which stipulates that the strength of a uniform standard must match that of Section 206 of the Investment Advisors Act of 1940. The Institute recently sent a letter to the SEC outlining its position and further criticizing SIFMA’s stance.