A panel of former SEC chairmen agreed Tuesday that a fiduciary standard should be imposed on brokers who provide investment advice to individuals, and SIFMA President Timothy Ryan agreed, saying “we’ve embraced a fiduciary standard,” but that such a standard follow a business neutral model.

Tim RyanSpeaking at the John C. Bogle Legacy Forum, organized by the Institute for the Fiduciary Standard and Bloomberg Link, on the future of the fiduciary duty, Ryan (left) said “the reality is that the expectation of retail investors is that they’ll be treated the same way whether they have a Merrill Lynch broker or a Morgan Stanley broker, or an independent financial advisor.”

Former SEC Chairman Harvey Pitt followed by saying he “looks at this question pragmatically. In the marketplace, what do [retail clients] think they are getting? The broker may be looked upon as someone who puts the interests of their clients first.”

Harvey PittHowever, Pitt (right) continued, “most people don’t understand the differences between a suitability standard” and a fiduciary standard, “even sophisticated people presume their interests are being looked after,” concluding by saying “anything we do has to come from the perspective of the customer.” Pitt later said that when it comes to brokers, “If I’m doing anything other than being an order taker, I have to put my client’s interests first.

However, Ryan countered by noting that the Advisers Act has no definition of fiduciary, unlike ERISA (Ryan is a former ERISA fiduciary lawyer) and called on the SEC to propose a fiduciary definition and place it before the industry for comments.

As part of a discussion between the panelists on the value of cost benefit analyses when it came to SEC and other regulator rules, Pitt suggested that “you should have economists do CBAs, not attorneys,” and called for the commission to create an advisory board of economists and econometricians to perform those analyses, suggesting that the courts would be more likely to uphold their efforts rather than those of SEC lawyers.

Pitt argued, and fellow former SEC chairmen Arthur Levitt and David Ruder agreed, that Mary Schapiro is doing an excellent job running the SEC under very difficult, “polarizing” conditions. He further warned that “a fearful, attacked uncertain regulator is much worse than a vehement” confident regulator. The SEC staff, he said, “sits in fear that whatever decision they make” will be pilloried, especially in Congress.

Read John Bogle’s comments at opening of event honoring his legacy at AdvisorOne.