While there is a “small chance” that Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro will issue a proposed rule to put brokers under a fiduciary mandate by year-end, the most likely scenario is that, in the “short term (over the next three to four years), we aren’t going to see any fiduciary rule with teeth,” Knut Rostad, president of the Institute for the Fiduciary Standard, told AdvisorOne on Wednesday.
“I think regulators will continue to punt” the fiduciary issue, Rostad (left) said. “In the short term at least, protecting the fiduciary standard will have to come from the advisory profession itself.”
Indeed, Schapiro herself, who has been a staunch advocate of putting brokers under a fiduciary mandate, could likely be departing her post at the end of this year. Rostad and David Tittsworth, executive director of the Investment Adviser Association (IAA) in Washington, say conventional wisdom is that it is unlikely Schapiro will continue as chairwoman next year, even if President Obama is re-elected.
While it’s certainly not unusual to see a “fair amount” of turnover at federal agencies in the wake of a presidential election, Tittsworth says that if Republican presidential hopeful Mitt Romney wins the White House, it’s widely expected that he will appoint a replacement for Schapiro.
“Significant changes in the composition of the commission” could well occur after the elections, Tittsworth says, “and those changes may very well determine the fate of the Section 913 [fiduciary] rulemaking.”