Vantage Points: Investment Adviser Group Head Says SEC Rule on Broader Fiduciary Duty Long Overdue
As the Department of Labor (DOL) proposes to amend the definition of fiduciary under the Employee Retirement Income Security Act, the hotly contested debate over a single fiduciary duty for providing personalized investment advice has taken center stage in the United States. Not surprisingly, the issue of which investment service providers owe a fiduciary duty, and when, has fueled commentary from industry insiders and politicians alike in the aftermath of the Labor Department announcement.
Although the DOL proposal is currently in the spotlight, the Securities and Exchange Commission (SEC) was given a mandate under the Dodd-Frank Act of 2010 to study the issue and the option to issue new rules, with the provision that any such rules accommodate a commission-based fee model. While the SEC did study the matter, the legal complexity of the issue — together with intense lobbying from those with significant commercial interests on the line — has kept the issue in limbo.
Kurt Schacht, CFA, managing director of Standards and Advocacy at CFA Institute, and Karen Barr, president and CEO of the Investment Adviser Association, discuss whether the SEC should require broker-dealers to be governed by the same principles-based fiduciary duty as required under the Investment Advisers Act.
Updated 14 July 2015
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