In our webinar yesterday, The Converging Worlds of Brokers and Advisors as Fiduciaries under Regulatory Reform, we took a look at the differences between the suitability standard for brokers and the fiduciary standard for advisors, and the outlook for the "harmonization" of the two standards as the debate over a fiduciary standard as a part of regulatory reform is taking place.
As we've touched on in this blog before, due to a consensus that fiduciary duties are likely to be extended to both brokers and advisors who deliver investment advice, the debate now is on what the fiduciary standard will look like. While some would like to see the existing fiduciary standard defined in legislation (ERISA, UPIA, UPMIFA, MPERS) extended to all investment advice, others would prefer to see a standard that incorporates elements from the existing suitability standard. With these two views in mind, some of the difficult questions facing regulators in creating "harmony" include:
- Will individuals still be allowed to be registered both as a broker and an advisor?
- Will principal trades require up-front approval?
- Will self-custody by advisors be prohibited or made impractical?
- Will a universal fiduciary standard extend to advice regarding insurance products?
- How will the sale of proprietary products be managed?
- What will be the impact on product design in light of fee and compensation leveling requirements?
- How will the brokerage culture adapt to the extension of fiduciary duties?
Click "Play" on the media player below to view the recording of yesterday's webinar and hear some of our thoughts on these questions and harmonization in general. You may also download the presentation slides used in the webinar. The recording of this and previous webinars are all available for download in our archive.
What do you think? Let us know in the comments below.
We'll be answering more questions submitted during the webinar on the blog over the coming weeks. If you have a question on this subject that you'd like us to answer, send us an email at blog@fi360.com.
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