The SEC released its anticipated study on standard of care for registered reps last month, yet InvestmentNews reports: “Now it's anyone's guess when or even if a single fiduciary standard will be adopted.”
Among the factors putting quick implementation of a fiduciary standard in limbo are:
- Changing political winds (Republicans took control of the House of Representatives and gained ground in the Senate after recent elections)
- Funding/budgetary concerns at the SEC
- A strong sentiment that the SEC staff report leaves many unanswered questions, including how a universal fiduciary standard might increase financial professionals’ costs and impact consumers’ access to products and services.
The final point is spelled out in a statement by SEC Commissioners Kathleen Casey and Troy Paredes, who dissented to the majority staff report. It also echoes concerns NAIFA has raised since debate began.
NAIFA President Terry Headley told InvestmentNews, “The risk is displacement. Perhaps that middle-income market will be disenfranchised and underserved. That's one of the unintended consequences not being addressed. What we want to make sure is that middle-income Americans have access to qualified financial advice.”
NAIFA will continue working to ensure any eventual fiduciary standard would protect the ability of registered reps to stay in business and ensure rights of consumers to choose the products and services they want. And no one is sure how the situation will play out. “The wild card is the amount of push-back the SEC gets from Congress as a result of [the Casey and Paredes] dissent, and the NAIFA lobbying,” Barbara Roper of the Consumer Federation of America told InvestmentNews.
NAIFA’s vigilance has already paid dividends. Thanks to stalwart advocacy efforts, the original Dodd-Frank Act says that even if the SEC does implement a fiduciary rule, agents will not violate the standard simply by charging commissions or offering proprietary products.