Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Broker Dealers

Report Foresees Changes for Agents and Brokers in Wake of Dodd-Frank

Your article was successfully shared with the contacts you provided.

Agents, brokers, advisors and others in the investment industry value chain will have to undergo a “redefining transformation” of their businesses to compete post-Dodd-Frank, according to a new research report.

This will include modifying their business models and other components of their business, including marketing practices, according to a new research report by the Financial Research Council, Boston, Mass.

The report says that the Dodd-Frank financial services reform legislation, especially the provision mandating a uniform fiduciary standard, will require changes in organizational processes, product development and marketing practices if the companies want to remain competitive.

These will be required, the report says, “to make advice and fiduciary standing safe, scalable, and easy to execute.”

Stephen Winks, author of the report, says that “Brokers, in their new role as advisor, will be addressing investment and administrative values, such as risk, return and cost structure, on behalf of the customer, and not just selling investment products.”

“That’s not required today,” he adds. “This has industry-wide implications.”

The report, entitled “Reshaping the Financial Services Industry: Operating Under Dodd-Frank,” concludes that brokers and asset managers who quickly and clearly understand the implications of the SEC rulemaking “will have a real opportunity for growing market share and profitability.”

The report says the SEC’s report suggesting a uniform fiduciary standard, published in January and mandated by the Dodd-Frank law, established for the first time “that brokers are required to acknowledge their fiduciary status and affirm that they are acting in the best interests of the retail consumer.”

Bob Hedges, FRC’s chairman, says that “Going forward, brokers will be operating under a more stringent fiduciary standard of care.”

Rather than advice being incidental to trade execution, “trade execution will be incidental to advice,” Hedges said.

The report is based on results of FRC’s analysis of the SEC’s study, as well as other industry regulations, regulatory hearings and staff commentary, current industry operating policies and practices, corporate structures, and court decisions.

–Arthur D. Postal


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.