Hopes dashed: Collins amendment extends fiduciary standard to BDs, but excludes variable annuity sellers

LET’S SAVOR THE MOMENT

The Collins amendment greatly improves consumer protection by (a) acknowledging brokers render advice, (b) imposing the best interests of the consumer as the first and foremost fiduciary duty of the brokerage industry based on objective non-negotiable criteria of statute, case law and regulatory opinion letters and© requires brokers and custodians to provide the enabling resources necessary to safely bring easy to execute and manage fiduciary standing within the reach of every advisor, as consumers will allow. Importantly other provisions do away with arbitration proceedings which has been an iron clad industry defense maintaining brokers do not render advice thus absolving brokers from any responsibility for their investment recommendations.

This is terribly good news for the consumer, the advisor and the industry at large. What the industry does not yet realize is in addition to the consumer and the advisor being well served, the economics of the new advisory services business model is far better than that of conventional commission sales as it leverages through process and technology not products.

Could it be better and more broadly applied to annuity applications? Absolutely.

But this legnthly decades old consumer protection battle establishing fiduciary standing based on non-negotiable fiduciary criteria should be savored. The effort expended has been exhausting. We certainly can still push for the extention of this consumer protection to insurance and annuity applications, but at the moment—I could not be more pleased that it looks like the best interest of the consumer will finally prevail.

There were times when the odds were so great against us when I did not expect this outcome in my lifetime. It lends credence to the wisdom of doing the right thing regardless of the massive power of the brokerage/insurance lobby which have pushed back on innovation and modernity. The best interests of the investing public will always prevail, we just never know when or how long it will take.

The battle of acknowledging advice is being rendered by brokers is all but won, but the war is providing the necessary enabling resources to safely bring fiduciary standing within the reach of all.

SCW