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Opponents of Maryland fiduciary bill tell lawmakers to wait on SEC

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By Mark Schoeff Jr.

Originally published on Investment News

Supporter praises state for stepping in where federal regulator falls short

Opponents of a Maryland bill that would raise investment advice standards for the state’s brokers and insurance agents told lawmakers Wednesday to wait for the Securities and Exchange Commission to go first on advice reform.

But a supporter praised Maryland for stepping in where he said the SEC would fail.

The Maryland House Economic Matters Committee and the Senate Finance Committee held hearings on bills that would impose a fiduciary duty on brokers and insurance sales professionals, requiring them to act in their clients’ best interest without regard to their own financial gain.

Waves of witnesses gave short testimony before Maryland legislators, with most of the discussion focusing on the fiduciary provision — even though it comprises less than a full page of the 50-page legislation designed to protect financial consumers.

Most of the people participating in the hearings urged Maryland lawmakers to put the brakes on, and warned state action could be preempted by a federal rule.

“We’re just asking you to wait until the SEC concludes its work,” Mark Quinn, director of regulatory affairs at Cetera Financial Group, told House lawmakers.

Lisa Bleier, managing director and associate general counsel at the Securities Industry and Financial Markets Association, tried to assure lawmakers that the centerpiece of the SEC’s proposal, Regulation Best Interest, would require brokers to disclose and mitigate conflicts of interest.

“Mere disclosure is not enough under the proposed Regulation Best Interest,” Ms. Bleier said at the House hearing.

But Knut Rostad, president of the Institute for the Fiduciary Standard, praised the Maryland bill, saying it would provide better investor protection than the SEC proposal.

“The SEC is virtually certain to fall short of a true fiduciary standard,” Mr. Rostad said in his House testimony. He added in prepared remarks: “Maryland has a unique opportunity to lead the nation towards a real fiduciary standard.”

Read the full article on Investment News

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