On the one-year anniversary of the signing of Dodd-Frank on Thursday, the representatives of the independent broker-dealer industry remain concerned about the lack of clarity on implementation of some key issues emanating from the act, along with the law’s unintended consequences.
When asked whether he thought Dodd-Frank had done a good job of protecting consumers and the markets from another financial crisis, Dale Brown said he “wouldn’t opine on the broader impact” but rather would focus on the issues that affect the members of the Financial Services Institute (FSI), where Brown has long served as president and CEO and chief spokesman for the IBD community.
“Has investor choice and investor access been helped by Dodd-Frank? Not yet,” Brown said in a Thursday interview with AdvisorOne. “The potential is there to eventually be a resounding ‘Yes’ to that question, but we’ve got a long way to go.”
For Brown (left) and the FSI, what’s at stake is “investor choice and access,” that independent BDs and its representatives continue to be able to “serve the broadest cross section of clients in the marketplace”—from the high-net-worth to “scaling their practices to what smaller investors need. We want to be sure that small investors, the Main Street investor, has access” to independent advice. “They’re the ones,” Brown said, who stand to “get their choices restricted” should implementation of Dodd-Frank be accomplished in a certain way.
Forestalling that restriction, Brown suggested, would include implementation of “harmonized, effective regulation” for all advice givers, on which, he said, “we’re no closer to that goal than we were a year ago.” Another, he said would be establishing a self-regulatory organization for RIAs. FSI remains in favor of FINRA being the SRO of choice for investment advisors, he said, because “ we’ve got to acknowledge that the status quo regarding nvestment advisors is no longer acceptable. The regulatory gap must be closed.”
Assuming that’s the case, “What’s the most efficient option available to close that gap for investors and the industry? An SRO for advisors, and FINRA is the best candidate.” Brown said that FSI was “very pleased” to see the Consumer Federation of America “coming to that same conclusion.” (CFA’s Barbara Roper expressed the consumer group’s decision in favor of an SRO for RIAs last week.)