Yesterday, fi360 submitted our comments to the SEC on their study analyzing the effectiveness of existing regulatory standards for brokers, dealers, and investment advisers and identifying any gaps or overlap in regulation.
In short, we believe that too much confusion exists on the part of investors as to how financial service providers' functions differ and how these differences affect investor protection. Over time, the services provided by broker-dealers and investment advisers have come to more closely resemble each other in a way that wasn't envisioned when the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 were passed. This has made it necessary to introduce new regulations that clearly demarcate the roles of product providers versus advice providers.
Some of the specific recommendations for the SEC's study and eventual rulemaking that we suggest are:
- That Congress remove the exemption for incidental advice from the Advisers Act
- Create uniform disclosure requirements for brokers and advisers that emphasize avoiding and managing conflicts of interest, but that do not bog down the provision of investment advice
- Define "fiduciary," "best interests of the customer," and "personalized investment advice" in line with the Committee for the Fiduciary Standard's five core principles and existing SEC regulations
Our full comments can be downloaded here.
All comments submitted on this issue can be found on the SEC's website.
Comments