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August 23, 2011 at 09:05 AM
Even though the Dodd-Frank Act passed into law more than a year ago, we still have little more than a few clues about how it will change the working lives of brokers and advisor. Still, the debate it has initiated within the financial world has given us a much better understanding of the positions that the various interested parties will take in the ongoing conversation.
For instance, the call for a fiduciary standard for brokers is so widespread that virtually everyone—including the brokerage industry—appears to embrace it. Its former opponents have shifted their tactics to making attempts at watering down proposed laws or regulations to the point where they provide little additional consumer protection. What’s more, our timeframe for any changes has shifted as well: With both the SEC’s funding and Congress’s interest in any financial reforms waning, changes to the advisory world will more likely happen later rather than sooner.
It was in the light of both of these realizations that Knut Rostad announced August 22 that he had resigned from the Committee for the Fiduciary Standard, which he had founded, to launch the newly formed Institute for the Fiduciary Standard. “The Committee was formed as an informal group of influential industry leaders,” he told me, “to help guide the regulations resulting from Dodd-Frank. But in an extended debate, some of us felt that a more formal approach would be more effective. While we’ve made progress advancing understanding of the fiduciary standard and its practical importance, there’s much left to do. We are in the midst of rulemaking in DOL and the SEC; misunderstandings abound about what fiduciary means. The Institute provides a permanent platform to build a full program of advocacy and education on this important public issue.”
Rostad is in august company, with the other Institute founders: James Patrick and Marion Asnes of Envestnet; Maria Elena Lagomasino and Michael Zeuner of GenSpring Fanily Offices; Philip Chao of Chao & Co.; and Kathleen McBride, formerly editor-in-chief of Wealth Manager and now with the Institute for Private Investors. Rostad also announced that Roger Ibbotson has agreed to serve on the Institute’s board of advisors.
