More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
"The Committee believes the essential question is 'What does fiduciary law require' and sought to inform the SEC study through the writings of many of the best known independent scholars with different views. This approach is fundamentally at odds with the opposing approach which seeks to tailor the standard to different business models. The difference is stark: one approach explores how practices should conform to a standard; the other approach explores how the standard should conform to business practices," Committee Chairman Knut A. Rostad told WealthManagerWeb.
The Committee has contributed the volume to the SEC's call for public comments which ended August 30. The Committee will also deliver "The Fiduciary Reference" to the SEC in person.
"At issue, among others, is whether all investors have equal access to fiduciary advice," Rostad said in a news release. "These articles are a 'must read.' While they represent diverse views on matters of implementation, they reveal common themes, including: how duties vary based on the disparity of knowledge between the advisor and client; that disclosures, while necessary, are not sufficient to fulfill, and not synonymous with, fiduciary duty; and that fiduciary requirements are not, as some suggest, 'vague.' "
The Fiduciary Reference is available both as a paper volume of approximately 1100 pages, and a Web-based reference. It includes 23 articles or papers written by the leading fiduciary thinkers and refers via link or abstract to 84 others.
Authors include Nobel Laureate George Akerlof, Professor Tamar Frankel of Boston University, Rutgers University Professor Arthur Laby, and a 1948 speech by the late Harvard Law Professor Louis Loss--who had been Associate General Counsel at the SEC.
Washington Event to Discuss the Fiduciary Papers
With several co-sponsors, the Committee will hold a Public Policy Forum in Washington DC on September 24, "The Fiduciary Standard in a Brokerage Setting." The event is co-sponsored by the Certified Financial Planner Board of Standards, Financial Planning Association, Financial Services Institute, and National Association of Personal Financial Advisors. The Forum is intended to bring leading fiduciary thinkers together to discuss all angles of the debate about extending the fiduciary standard to brokers who provide advice to investors.
Comments? Please send them to firstname.lastname@example.org. Kate McBride, AIF(R), is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.