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Maryland Lawmakers Get Earful On Proposed Broker Fiduciary Rule

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By Tracey Longo

Originally published on Financial Advisor Magazine

Those both for and against Maryland legislation that would put brokers and insurance agents under a state fidicuary rule testified before state legislators on Wednesday.

Securities industry representatives told Maryland lawmakers that they should let the SEC finalize its “best-interest’ advisor standard before considering a law that would blanket registered reps and hybrid advisors in the state with a fiduciary standard.

Those in support of the proposal said state protections are needed in case the SEC regulations fall short.

Maryland is among several states pursuing legislation that would apply such a fiduciary standard to all advisors and brokers. Legislative committees heard from those both for and against the proposal.

Dale Brown, president and CEO of the Financial Services Institute (FSI), which represents independent broker-dealers, told lawmakers at one legislative commitee meeting that he supports a best-interest standard, but that it should be implemented nationally and uniformly by the SEC.  SEC officials have said they expect to finalize their “best interest” standard by end of summer.

Brown also predicted that the state’s provision would impact Maryland consumers “by significantly increasing costs that would eventually be passed on to investors.”

FSI represents 635 Maryland financial advisors and two broker-dealers who support 9,413 jobs and generate nearly $1 billion in economic output in the state annually, the group said. FSI successfully convinced Maryland lawmakers to withdraw their fiduciary bill last year.

“A state-specific standard would also likely lead some firms to stop offering commission-based financial planning services,” Brown told lawmakers.

Legislators also heard from those in support of the legislation.

Knut Rostad, founder of the Institute for the Fiduciary Standard, directed Maryland lawmakers to his group’s website, where real investor “Gail from Maryland” tells her story of being ripped off by an abusive broker.

“Watch our video. Listen to Gail. Keep her picture and story in mind as you proceed on a fiduciary rule,” said Rostad. “Maryland must enact a fiduciary rule because the SEC, if it proceeds as planned, is virtually certain to fall very short of a real fiduciary standard.”

Read the full article on Financial Advisor Magazine

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture