How a surprising array of advisor groups aims to catch the SEC's ear
A conference of experts from academia, industry will examine how the fiduciary standard could work in a brokerage business
4 min read- Conference aims to influence SEC's study on merging broker-dealer and advisor regulations.
- SEC staff, FINRA, and state regulators are the target audience for fiduciary standard discussions.
- Study mandated by Dodd-Frank could lead to new SEC rules impacting advisors and brokers.
The Committee for the Fiduciary Standard and a surprisingly broad collection of advisor groups has announced plans for a conference to address the critical question of how the fiduciary standard might — or might not — work in the brokerage businesses.
Advisor advocacy groups are betting that SEC staff is focused on the fiduciary issue as the commission undertakes a mandated study of how to combine broker and advisor regulation. The audience is expected to be SEC and FINRA staff, as well as state regulators.
“The overall vision is focused on providing some of the best independent experts in the country on the topics,” says Knut Rostad, the chairman of the Committee.
Attendance at the conference is by-invitation only and limited to 140 people, according to organizers. Speakers include securities law experts Tamar Frankel, a Boston University School of Law professor, and Arthur Laby of Rutgers School of Law. Robert Prentice, business professor at the McCombs School of Business at the University of Texas at Austin is also scheduled to attend; he is known for his work on behavioral economics and investments.
MSSB president invited
Old foes in the fiduciary debate join new battle to sway SEC's six-month study
The organizers are still lining up speakers from industry. Rostad said Charlie Johnston, president of Morgan Stanley Smith Barney, has been invited.
The conference is remarkable because it is co-sponsored by groups from across the advisory spectrum, including those representing independent advisors and those who work for independent broker-dealers, and those representing both fee-only and fee-based advisors. See: Old foes in the fiduciary debate join new battle to sway SEC’s six-month study
The SEC is working on a study of how to merge the regulatory framework that covers brokers and advisors. The biggest question is whether the existing fiduciary standard ought to be extended to brokers’ relationships with their retail clients. The Investment Advisers Act of 1940 already holds advisors to the fiduciary standard. See: What went right: the story of the fiduciary standard this year
The Dodd-Frank financial reform bill mandated the study. It’s due Jan. 17, and it’s expected that the study will be followed by new rules from the SEC. The SEC is also studying what agency is the proper regulator for advisors and brokers. The obvious candidate for a new regulator, or danger, depending on your perspective, is FINRA.
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With so much at stake for advisors, their advocates have been working on the question of how to win the ears of staffers and commissioners at the SEC. That intense effort comes just after a period of unprecedented lobbying as the administration and Congress worked on financial reform legislation.
No rest for weary fiduciaries
(Updated) Groundbreaking SEC study would smash old regulatory system, creating fiduciary brokers and more regulated advisors
“After the last 18 months, it seems like we ought to get a break,” says Kevin Keller, CEO of the CFP Board of Standards. “We aren’t.”
The methods of influencing Congress are fairly obvious, though lobbyists brought different levels of skill and money to the task last year during the Dodd-Frank debate. Groups can make campaign donations; send troops of representatives to make the rounds on the Hill; testify persuasively at hearings, and get at public opinion through the media.
Staff at the SEC, however, is encircled by a barbed wire of regulations. Advocates can’t take them out to lunch; it’s not even really clear who is working on the study. Congress has sway over the SEC, but that kind of influence tends to be exerted more on sweeping issues than on the nitty-gritty of regulations.
The conference, which has been the buzz among advisor advocates for weeks, attempts to put pointed debates in front of regulators, with the idea of helping them zero in on the central issues. Among the specific issues to be addressed, Rostad said, will be the role of informed consent, the role of disclosure and financial literacy.
Not one-sided
Rostad said the conference is not intended to be a one-sided presentation that favors extending the fiduciary standard to broker-dealers, and pointed to the presence of the Financial Services Institute (which represents advisors affiliated with IBDs) as a sponsor as evidence that the panels will be the scene of a real conversation.
The conference is to be held Sept. 24 from 8:30 a.m. to 5 p.m. at the Hyatt Regency Washington. Co-sponsors include the Committee for the Fiduciary Standard, the Certified Financial Planner Board of Standards, the Financial Services Institute, the Financial Planning Association and the National Association of Personal Financial Advisors. Other general sponsors will be announced in the next few days, Rostad said.
Other confirmed speakers include: Investor rights advocate Mercer Bullard, Attorney Brian Hamburger, and Barbara Roper, director of investor protection for the Consumer Federation of America. Rostad hopes to line up a top lawyer from the broker-dealer world, too.
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