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The Institute for the Fiduciary Standard

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Does Reg BI really hold brokers to a higher standard than investment advisers?

By Knut Rostad on June 14, 2019

Originally published on Investment News by Knut Rostad

Reg BI rolled-out with bravado and fanfare on June 5. The SEC chairman spear-headed a two-hour presentation on two rules and two interpretations aimed at bringing “the legal requirements and mandated disclosures in line with reasonable investor expectations.”

In an open meeting, the chairman outlined the hurdles overcome — including interested parties “strident and divergent views” — to get to today. He applauded the expertise, experience and hard work of SEC staff, and cited dozens by name. The celebratory feeling of the staff was palatable, deserving of the achievement the chairman credited them with. Very nice, indeed.

John Taft is vice chairman of Baird and former chairman of the Securities Industry and Financial Markets Association. He’s the architect of SIFMA’s July 2011 blueprint for a best interest standard and lead the lobby group through the development of the Dodd-Frank legislation. Mr. Taft is a good sparring partner. We’ve taken opposing views on conduct standards since 2009, when our group said SIFMA’s standard fell short of an authentic fiduciary standard. SIFMA publically disagreed with our comment.

Mr. Taft is a veteran advocate for broker-dealers, arguably the most experienced B-D executive advocate in the country today, and so his opinions matter greatly in the B-D community.

His InvestmentNews piece on Reg BI makes a pretty big claim: that brokers are held to a higher standard than investment advisers because “disclosure of a financial conflict alone is not considered adequate under the rule.”

Read the full article on InvestmentNews.

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

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