While most of the fiduciary attention in the financial regulation overhaul discussions has been related to investment advisors, two interesting headlines in the last week put some focus on the fiduciary role of managers. The Senate Special Committee on Aging is holding hearings on target date funds this Wednesday. Specifically, the Committee wants to focus on the quality of funds being used, the asset allocation as the funds approach their target date, and conflicts of interests on the part of the investment managers.
In addition, a study by Morninstar found that most managers do not invest in their own funds, but those funds whose mangers do invest in them, perform better. While not a requirement for a manager to invest in their own funds, it does align compensation with the best interests of investors and is a part of Practice 2.6 in the Prudent Practices for Investment Managers handbook.
Fiduciary duties as they relate to investment advice will continue to dominate the headlines during the coming months of regulatory reform, but it should be worthwhile to pay attention to these stories regarding the duties of the managers as well.
On to the rest of the links...
In the news/commentary:
- Draft Investor Protection Act includes fiduciary standard for all investment advice, SEC as rulemaker
- Ketchum talks advisor oversight
- "The world of compliance of 2008 is dead," says the SEC's Compliance Office
From the organizations/associations/government/academia:
- The Committee for the Fiduciary Standard says SIFMA's proposal for regulatory reform doesn't do enough to protect investors
- Berkelely/CMU/Harvard paper says conflicts of interests among auditing firms contributed to financial scandals
From the blogs:
- Poor monitoring habits and not clearly identifying fiduciaries among comon fiduciary challenges
- Health Plan Law looks at a decision about a plan's language regarding delegation of fiduciary duty
Tweet of the week: @BrightScope: Hey industry, transparency is not just a fun buzzword anymore. #fiduciary
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