More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
Advisors are of one mind in their concern over regulation, but they're of several different minds when it comes to a level playing field for a fiduciary standard. Those are some of the key findings of a recent telephone survey of 503 RIAs conducted in mid-May by Maritz Inc. on behalf of TD Ameritrade Institutional (not all respondents custody with TD Ameritrade).
Not surprisingly as the Obama Administration, Congress, and regulators are floating ideas for major reform of financial services regulation, the survey found that regulatory changes and the macro-economic environment were respondents' top concerns (34% and 31%), along with profitability (27%). Also not surprising for RIAs, two-thirds of respondents said they'd like to see a fiduciary standard applied to brokers, but there was wide disagreement on what that standard should be: 36% said the current RIA standard should be applied to registered representatives; 29% said SIFMA's proposed Principles of Fair Dealing should be applied, and 25% said the current suitability standard for brokers should be maintained.
Assuming that there will be a financial impact on their businesses from re-regulation, 44% of respondents said they would either absorb the added costs themselves or pass on some of those costs to their clients.
In an interview, TD Ameritrade President Tom Bradley said that while "you can't be a salesperson and a fiduciary," there's room for both a suitability standard and a fiduciary standard, but "with a hard line between the two." After all, he said, a client who was a "prudent person" and was asked to choose between the two "would probably choose the fiduciary."