Fiduciary Standard: Business Booster or Budget Buster?
By Hal M. Bundrick
NEW YORK (MainStreet)--As the financial services industry wrangles over a uniform fiduciary standard for investment advisers and broker-dealers, two major associations have submitted information to the Securities and Exchange Commission, one emphasizing the benefits, another estimating the costs.
In a letter to the SEC, the Financial Planning Coalition said research conducted by the Aité Group reported that broker-dealers who are already operating under the fiduciary standard "experience stronger asset growth, stronger revenue growth, and obtain a greater share of client assets than those that provide services primarily under a non-fiduciary model."
The Coalition - which is comprised of Certified Financial Planner Board of Standards, Financial Planning Association and the National Association of Personal Financial Advisors - stated that a "fiduciary standard will benefit retail customers and their financial advisers, and will not impose significant costs."Currently, investment advisers are held to a "client first" fiduciary standard while registered reps of broker-dealers abide by a less-strict "suitability" standard. "The fiduciary standard should be no less stringent than the existing fiduciary duty standard under the Investment Advisers Act of 1940," the Coalition's letter states. "This standard should be based upon the core principle that, when providing personalized investment advice to retail customers, a financial adviser (however registered) always must act in the best interests of those customers. The SEC should adopt this uniform fiduciary standard immediately." The group also claims that the conversion of fee-based brokerage accounts to fiduciary accounts does not lead to increased costs or decreased services.
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