WASHINGTON BUREAU — The Securities Industry and Financial Markets Association today released a study indicating that applying a uniform fiduciary standard to all investment product sales would likely reduce product and service availability.
The impact assessment, by consultants at Oliver Wyman, a unit of Marsh & McLennan Companies Inc., New York (NYSE:MMC), suggests that retail investors are likely to see a “negative impact on choice of advisory model, product access, and affordability of investment and advisory services” if the U.S. Securities and Exchange Commission (SEC) applies the Investment Advisers Act of 1940 fiduciary standard to all brokerage activity.
In the study, the Oliver Wyman consultants conclude that clients would face direct costs, and that the industry as a whole would face broader economic costs.
A uniform fiduciary standard could lead to “potential limitations on products accessibility for retail investors would place constraints on capital formation and an issuer’s ability to finance at cost-effective rates,” the consultants say.
Terry Headley, president of the National Association of Insurance and Financial Advisors, Falls Church, Va., says he agrees with the SIFMA study conclusions.
Headley says most of NAIFA’s members are community-based small business owners.
New demands to move to a fiduciary standard of care could force some NAIFA members who are registered representatives to increase the cost of their services, and it could force others to leave the