As financial services reregulation continues to inch it’s way through Congress–in the form of the Dodd bill in the Senate and the Investor Protection Act in the House–FINRA’s strategy is becoming more clear. For anyone else who’s interested in affecting the legislation or in its eventual outcome, it’s time to start thinking about what that outcome would look like, if it’s not too late, already.
As Melanie Wadell reports in her December Washington Watch column in IA, various revealing amendments have been added to the bills. Three of them are particularly troubling, and all hint of FINRA fingerprints. First, Dan Maffei (D-NY) offered an amendment stating that B/D reps will not be held to violate their fiduciary duty solely because their firm offers a limited product line. Well, duh? Why would competitive products be in a client’s best interest? (This is consistent with the CFP Board’s standards for those of you who are keeping score.)
Then, good ol’ Jeb Hensarling (R-TX) wants the fiduciary duty to be limited to each transaction, not an entire client relationship. Sound familiar? That’s not likely to lead to any client confusion over when her broker is acting in her best interest and when he isn’t. This, of course, has been SIFMA’s position all along: They’re all for a fiduciary duty, but only when a broker is specifically giving advice, not when they are selling a product, to the same client. Certainly the clients can sort that out.