Views on improving the integrity of global capital markets
14 July 2015

Vantage Points: Investment Adviser Group Head Says SEC Rule on Broader Fiduciary Duty Long Overdue

Posted In: Fiduciary Duty, US SEC

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.

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Updated 14 July 2015 

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About the Author(s)
Crystal Detamore

Crystal Detamore is a communications director at CFA Institute and a former columnist for Entrepreneur magazine.

1 thought on “Vantage Points: Investment Adviser Group Head Says SEC Rule on Broader Fiduciary Duty Long Overdue”

  1. Robert Andriano says:

    Kurt made the point eloquently that “salespeople cannot be advisers”. If someone receives any kind of compensation to sell a product, then the person cannot possibly act in the best interest of a client.

    The idea of imposing a fiduciary duty on broker dealers tries to accomplish the impossible but it would only institutionalize confusion and deception.

    Let advisers be fiduciaries and let salespeople sell to advisers! It’s not complicated and it’s how it works in other industries such as healthcare.

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