Financial Planning Coalition Zeroes In On Fiduciary Standard While A Key Consumer Group Shifts To Support Non-SEC Regulation For RIAs Hot

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The Financial Planning Coalition -- made up of NAPFA, the FPA and the CFP Board -- has issued a statement applauding the Senate Banking Committee for considering the issue of whether all self-proclaimed "investment advisors" should be held to a fiduciary standard.

 

As they say, "most investors assume their financial services providers are required to provide investment advice that is in their best interest. Unfortunately, this is not always the case. Investment advisors are required by law to put their clients' interests first, but other financial services providers do not have to live up to that high standard when providing advice."

 

In other words, according to the Coalition, non-fiduciary advisors are riding on the goodwill that fiduciary advisors have created around the job title "advisor," without having to do the work to maintain it.

 

Dodd-Frank gave the SEC the power to apply the duty to everyone claiming the title or distributing what could be considered investment advice.

 

Fair enough, but the far more heavily funded and wirehouse-dominated Securities Industry & Financial Markets Association (SIFMA) is lobbying hard to stall the process of putting Dodd-Frank into action -- and that includes making fiduciary rules apply universally. 

 

As CEO Timothy Ryan recently told Bloomberg, "we just want to see it done responsibly, reasonably, and, if they need more time, quite frankly we'd rather they take more time."

 

One area of regulation Ryan seems happy to see change: the SEC as separate regulator for larger RIAs.

 

"We have too many regulatory agencies," he says. "We know that."

 

And influential advocacy group the Consumer Federation of America sees the transfer of RIA oversight to a self-regulatory organization like FINRA as a done deal.

 

In her testimony to the Senate Banking Committee, the CFA's investment protection chief Barbara Roper continued her support for a universal fiduciary standard, but concedes that she now agrees with SIFMA where it comes to taking RIAs away from the SEC.

 

It's a simple question of realism for her, not ideology.

 

"Having spent the better part of two decades arguing for various approaches to increase SEC resources for investor advisor oversight with nothing to show for our efforts, we have been forced to reassess our opposition to the SRO approach," she says.

 

As far as she's concerned, the right SRO would be better than what retail investors have to deal with now, which is an SEC so overloaded that smaller advisors can go decades between exams. 

 

 

 

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