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Industry Spotlight > RIAs

Regulatory change tops RIA concerns

By Staff Writer

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Regulatory reform is top-of-mind for most registered investment advisors, according to the latest TD Ameritrade Institutional Survey. RIAs expect they’ll need to devote more time to managing new regulation requirements, which they say could reduce time with clients. The response replaces business growth as the No. 1 when surveyed only six months ago.

“Regulatory changes are clearly weighing on the minds of RIAs right now, reflecting a growing fear of the unknown,” said Brian Stimpfl managing director of advisor advocacy and industry affairs, TD AMERITRADE Institutional, and Boomer Market Advisor contributing columnist. “While there is little consensus on the impact new regulatory rules or oversight might have on advisors, there is significant concern new regulations could put downward pressure on profitability and reduce time with clients.”

Most RIAs say they prefer to keep authority with the SEC or the states, 33 percent and 22 percent respectively. Two-thirds say they would like to see the fiduciary standard applied to registered representatives, who are currently held to a suitability standard, meaning products they sell or recommend must be suitable for the investor’s goals and circumstances.

RIA views on fiduciary standards:

  • Apply a universal fiduciary standard where the current fiduciary requirements for RIAs would also apply to brokers. (36 percent)
  • Adopt SIFMA’s proposed Principles of Fair Dealing that emphasizes fair treatment of investors by applying the same core standards of care whether the firm is a financial planner, investment advisor, a securities broker/dealer or another financial services provider. (29 percent)
  • Maintain the current fiduciary standard for RIAs and the suitability standard for brokers. (25 percent)
  • Many of the RIAs surveyed say they will wait to see the financial impact any new regulation requirements might have on their business (49 percent), while nearly half say they would absorb any additional costs or pass some on to clients (44 percent). Less than 10 percent surveyed expect to pass on all or most of any cost to clients.

RIA top five business concerns over the next year:

  • Regulatory changes (34 percent)
  • Macro-economic environment (31 percent)
  • Profitability (27 percent)
  • Managing risk, legal and compliance issues (18 percent)
  • Marketing (17 percent)