More On Legal & Compliancefrom The Advisor's Professional Library
- Anti-Fraud Provisions of the Investment Advisers Act RIAs and IARs should view themselves as fiduciaries at all times, whether they meet the legal definition or not. Deviating from the fiduciary standard of full disclosure while courting clients may cause the advisor significant problems.
- Proxy Voting RIAs are not required to vote proxies on behalf of their clients. However, when an RIA does assume responsibility for voting proxies, the firm’s policies and procedures should help to ensure that votes are cast in the best interest of clients.
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."