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A Uniform Fiduciary Standard?
It Could Work - If Done Right
uniform fiduciary standard might
A keep the wolves of Wall Street at
bay, but only if regulators take great
care in crafting the regulations. And
is that likely to happen? Probably not,
according to Frank Reilly, President of
Reilly Financial Advisors.
“If they were to do it correctly, I
think it would be a fabulous idea. But
I don’t think it can be done correctly,”
said Reilly, who doubles as the firm’s
chief compliance officer.
The battle lines on regulatory
change were drawn up in the aftermath
of the 2008 financial crisis. The
Dodd-Frank Wall Street Reform and
Consumer Protection Act gave the
Securities and Exchange Commission
the power to regulate those brokers
who provide retail investment advice
into always acting in the best interests
of their clients. The SEC, however, demurred
for a while on whether or not
to use that power.
“A strong uniform standard, however,
could really protect investors from
retail products that later turn out to be
poor investment options,” Reilly said.
“Then everybody out there would
only be doing what’s in the best interests
of their clients. … We see every
day where annuities are sold into an
IRA account. That never makes sense
…” Reilly told The Suit Magazine.
SEC Chairman Mary Jo White said
earlier this year, that she intended
to push the other commissioners on
whether or not they wanted to adopt
a new standard. This came after a year
of waffling that saw the SEC receive
an earful from lobbyists.
“The existing regulatory requirements,
oversight and enforcement of
rules governing registered representatives’
conduct, work well to protect
investors, and have proven to be an
efficient and effective way for middle
and lower income market investors to
retain access to financial products and
services,” the National Association of
Insurance and Financial Advisors asserted
in a statement released in July
of 2013.
Real action after White’s remarks in
2014, has yet to come, however. Still,
even the possibility of a uniform standard
remains a hot issue among financial
professionals.
“Crafting those regulations without
watering down standards across the
board remains an obstacle to regulatory
change as well – and lobbying by
broker interest groups is sure to make
THE SUIT MAGAZINE - NOV 2014