Dodd Bill to Delete Fiduciary Standard
WASHINGTON, DC, February 25, 2010 -- The Committee for the Fiduciary Standard today called on members of the Senate Banking Committee to not delete the pro-investor cornerstone of Wall Street reforms, reinstate the fiduciary provision in Section 913 and reject a provision to "study" the issue.
"Wall Street needs reform, investors need protection, and Congress needs to act. Investors don't need a study." says Kate McBride, a member of the Committee Steering Group, and Editor of Wealth Manager Web.
Senator Chris Dodd, Chairman of the Senate Banking Committee, will introduce his financial reform legislation, minus a planned provision requiring brokers who render investment advice to individual investors to meet the fiduciary standard requirements under the Investment Advisers Act of 1940.
"The issue has been studied for many years. Our analysis of the study parameters (see attachment) offered by Senator Johnson reveals the key study questions have already been addressed by the SEC. As such, SEC Chairman Mary L. Schapiro and FINRA CEO Rick Ketchum have agreed it's time to act," says Knut A. Rostad, Chairman, The Committee for the Fiduciary Standard, and the regulatory and compliance officer at Rembert Pendleton Jackson, a Falls Church, VA, registered investment adviser.
The Committee analyzed the questions raised in the Johnson provision and found that much of the data with regard to differences in regulatory requirements and SEC resources used to regulate, examine, and enforce investment advisers and broker-dealers is currently available in reports on the SEC website. SEC staff have for many years been studying and reviewing many of the considerations raised by the proposed study questions, and been getting industry and consumer views from the newly formed SEC Investor Advisory Committee.
Most brokers also agree its time to act. In a survey released in December by SEI Advisor Network and the Committee, a majority of brokers (53%) agree all professionals who give investment or financial advice should meet the fiduciary standard; 27% disagreed; 19% were unsure. (attached)
"There are many brokers who essentially meet the fiduciary standard of conduct, but are hamstrung because their B/Ds oppose it. These brokers, I think, support the legislation because they believe it's the right thing to do for their clients and their industry," notes Edward Lynch, a member of the Committee, and Managing Director, 401K Advisors Group, an LPL affiliated firm. (Lynch also notes he is fortunate to have no such difficulties with his B/D.)
"When someone seeks advice from an investment professional, they believe they are receiving unbiased recommendations that are in their best interests, according to the SEC's Rand Report. If enacted with the fiduciary provision, this bill will make acting in the client's best interests a legal requirement. This will go a long way in restoring the public's confidence," says Roger Gibson, founder of Gibson Capital, LLC, and a member of the Committee Steering Group.
About the Committee for the Fiduciary Standard
The Committee for the Fiduciary Standard was formed last year to educate policy makers about the authentic fiduciary standard, as presently established under the Investment Advisers Act of 1940. The Committee's members are recognized leaders in the investment profession:
- Blaine Aikin, fi360
- Clark M. Blackman II, Alpha Wealth Strategies, LLC
- Gene Diederich, Moneta Group
- Harold Evensky, Evensky & Katz
- Sheryl Garrett, Garrett Planning Network
- Roger C. Gibson, Gibson Capital, LLC
- Matthew D. Hutcheson, Independent Pension Fiduciary
- Gregory W. Kasten, Unified Trust Company
- Kate McBride, Wealth Manager
- Ronald W. Roge, R. W. Roge & Company
- Knut A. Rostad, Rembert Pendleton Jackson
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