SEC Gropes Toward A Cost/Benefit Analysis Of Advisor Reform


Commissioner Mary Schapiro tells reporters she's ready to start collecting information on how advisors currently do business and how that may change under various scenarios.


Congress has been asking for a cost-benefit analysis for awhile now, but it seems that the SEC doesn't even have a mechanism in place yet to gather the data.


This has two major implications for advisors.


First, unless someone in Congress grabs the ball and runs with it pretty hard, the major issues that paralyze the industry last year -- universal fiduciary, continued SEC oversight of advisors -- have been kicked at least another year down the road.


We could easily be fairly deep into the next presidential term of office before the analysis is done, much less see the rules that the regulators build on that basis.


Second, this is a huge opportunity to tell the SEC what you really do. How do you add concrete value in terms of investor outcomes. Are your retired clients happier and better off than they would be otherwise?


Do certain products and compensation models hurt, help, or do nothing? Give concrete examples, if you have them.


What would a universal fiduciary code do to your business and to your clients? Would you welcome it?


What is regulatory uncertainty doing to your business?


The SEC may have an abstract notion of all these issues, but the more concrete data they have from all stakeholders, the more realistic their eventual rulemaking will be -- and, needless to say, the better your concerns will be reflected in the final outcome.





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