One of the many outcomes of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was a blizzard of mandated studies aimed at strengthening consumer protections.
One of the required studies tasked the Securities and Exchange Commission with examining the feasibility of a common fiduciary standard of care for broker-dealers and investment advisers. The SEC findings, which come down in favor a common standard, are not siting well with the
In a statement, NAIFA President Terry Headley expressed concerned about the possible adverse impact on middle- and lower-market investors if recommendations in the SEC study are carried out. "The study unduly discounts the risk that, as a result of the regulatory burdens imposed by the recommendations on financial professionals, investors may have fewer broker-dealers and investment advisers to choose from, may have access to fewer products and services, and may have to pay more for the services and advice they do receive," Headley said. "Any such results are not in the best interests of investors; nor do they serve to protect them."
He added that recommended regulatory actions with have serious financial ramifications for broker-dealers, investment advisers, and, ultimately, retail investors. "NAIFA’s fundamental concern is that the potential additional costs and increased potential for liability of applying a ‘one size fits all’ fiduciary standard of care to the broker-dealer business model could result in middle- and lower-market investors having less access to the account services and investment advice that are currently being delivered by registered representatives of broker-dealers."
