Views on improving the integrity of global capital markets
04 April 2013

Should All Financial Advice Providers be Required to Put Client Interests First?

The issue of creating a uniform fiduciary standard of conduct for investment advisers and broker-dealers in the U.S. has been hotly debated in recent years.

Although the U.S. Dodd-Frank Act gave the SEC authority to create a regulation that would impose a uniform fiduciary standard of care for retail investment advice — and a January 2011 SEC report recommended that the agency proceed with a rule — the agency has not taken action. Stalled for more than two years, a uniform fiduciary duty rule recently gained new momentum.

SEC Seeks Industry Input
Indeed, the SEC is now seeking input for a potential uniform fiduciary standard of conduct. While the SEC is specifically asking for data and other information relating to the costs and benefits of alternative standards of conduct for service providers (including a uniform fiduciary standard), it also welcomes comments on regulatory harmonization of standards. The SEC’s request comes after past court challenges led ultimately to other SEC regulatory initiatives being overturned.

CFA Institute Supports Single Standard of Care

Consistent with the CFA Institute Code of Ethics & Standards of Professional Conduct and in keeping with member survey results, CFA Institute has supported consistent treatment of all individuals and firms that engage in similar activities, regardless of the label assigned to the service provider. Thus, we advocate a uniform fiduciary duty standard for all who provide personalized investment advice about securities to retail customers.

For the SEC, this is an opportunity to eliminate misperceptions in the retail investor community by requiring all practitioners who offer personalized investment advice to act solely in the best interests of their clients.

It’s long overdue.

We encourage you to make your views known on this important issue. Submit your comment here by 30 June.


Photo credit: AP Images

About the Author(s)
Linda Rittenhouse, JD

Linda Rittenhouse, JD, was a director of capital markets policy at CFA Institute. She focused primarily on issues related to investment products and investment regulation. Rittenhouse holds a JD degree.

1 thought on “Should All Financial Advice Providers be Required to Put Client Interests First?”

  1. Jeffrey Molitor says:

    It is unfortunate that we need to state that the CFA Institute is in favor of having all practioners and members operate in the best intersts of clients. To the extent that this fundamental truism is not viewed as part of our core mission, the market must perceive us as conflicted in how our loyalties are divided between our clients vs. our employers. We need to make clear a commitment to focusing on clients and minimizing conflicts of interest.

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