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Regulation and Compliance > State Regulation

The Big Switch Affects Schwab Advisors

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One of the major effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is that RIA firms with less than $100 million in AUM will switch from SEC registration to state oversight. In discussing the effects of Dodd-Frank in general and prospects for imposition of a fiduciary standard of care on brokers, Bernie Clark of Schwab said “we want consumers to be protected” and that Schwab has been busy in Washington, educating regulators and the SEC about the need for “rules to support different kinds of investing.”

Clark also estimated that 50% of Schwab-affiliated advisors will be under the $100 million threshold, and that Schwab has conducted educational campaigns with its advisors about the switch to state regulation, including a webcast that attracted 1,200 advisors.

NASAA, the state securities regulators association, has been preparing for the “big switch” for some time and has made available a number of resources for affected RIAs in an IA Switch Resources minister at Joe Borg, the past president of NASAA and the Alabama state securities director, urged advisors at an Oct. 10 session at the FPA annual conference in Denver who think they may be affected to contact their state regulators for assistance in understanding the process. “Our doors are open,” Borg pledged.

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