Fierce opposition greets states’ fiduciary proposals
“Significantly drive up compliance costs.” “Affect clients adversely.”
These are just some concerns broker-dealers, financial advisors and trade groups have about Nevada and Maryland’s initiatives to impose uniform fiduciary standards.
Their main worry: A patchwork of state regulations could eliminate access to low-cost, transactional brokerage services, or increase firms’ costs related to meeting the rules. The opposition comes as the SEC deliberates its Regulation Best Interest proposal, causing some to fear that states’ proposals could needlessly compete with or complicate federal regulations, should they come to pass. Fiduciary proponents dispute that and counter that these regulations constitute necessary investor protections.
There are already too many regulations, says Don Moore, an advisor at Chesapeake Financial Services. Others are concerned the proposals could backfire against the consumers they are designed to protect.
The wirehouse's traders and salespersons misled and overcharged clients with regard to the securities, the regulator charges.
The advisor fooled her victims into thinking she would invest their funds when in fact she used the money to buy luxury items and real estate, prosecutors claim.
“This bill may affect us adversely, but it will affect our clients much more adversely,” said Mark Quinn, director of regulatory affairs at Cetera, at a Maryland General Assembly hearing on March 13th. He added that his firm operates as a BD and an RIA because customers demand the choice.
More than 25 advisors, firms, and advocacy groups appeared at the Maryland hearing in opposition to the state’s proposal. Approximately 20 firms and trade organizations have filed responses to the Nevada state secretary opposing its calls for a statewide fiduciary duty. Only four advisors and trade associations were supportive of the proposals at the Maryland legislative hearing, and fewer than five responded favorably to the Nevada state secretary’s request for comment.
Scroll through to see a sampling of the feedback culled from the Maryland General Assembly hearing, open letters to the Nevada state secretary, as well as Tweets, and public statements from advisors and others.