NEW YORK Deciding whether to impose a uniform fiduciary standard for brokers and investment advisors was a “high priority” for the SEC, but there is no timeframe for a rule, Commission Chair Mary Jo White said.
“I think it is very important area,” White said, speaking at the Securities Industry and Financial Markets Association’s Annual Meeting in New York. “Any time you have the same conduct regulated differently, you need to take a very close look at that and see what to do about it.”
White said that she had assigned agency resources to determining whether a uniform standard should apply to all advisors and was “lighting a fire” under her staff to press ahead with a decision. “I don’t have a timeline,” she said. “I want to get real traction so we can decide what to do.”
Under current rules, advisors registered as brokers at broker-dealer firms must recommend investments that are suitable for clients while advisors registered as investment advisors must operate as fiduciaries only acting in their clients’ best interest.
“You’ve got brokers and investment advisors particularly at the retail level providing the same advice to retail customers,” White said. “Retail customers particularly are not entirely sure whether they’re dealing with a broker dealer under suitability or an investment advisor under the fiduciary standard.”
One concern, she said, was establishing some “clear guideposts” around what constituted a conflict of interest for brokers if they were acting under a fiduciary standard. “Just because there are commissions [being paid] does not mean that there are conflicts of interest or that it is a violation of the fiduciary duty,” White said.
Reasserting the Commission’s authority under Section 913 of Dodd-Frank to establish a standard, White also acknowledged that the SEC was in conversation with the Department of Labor, which has issued a separate proposal that would apply a fiduciary standard to brokers dealing with retirement accounts.
“We’re separate and independent agencies but obviously realize the concerns about consistency and their impact their rulemaking can have on the broker-dealer model,” White said. “I’ve personally started to enter that dialogue as well.”