The 217 advisors from 161 RIA firms attending the TD Ameritrade Institutional regional conference in Southern California on Tuesday heard TD Ameritrade CEO Fred Tomczyk and TDAI President Tom Nally provide their views of the challenges and opportunities facing advisors.
In the opening session of the gathering in Dana Point, Calif., Nally reported that RIAs continue to take away market share of high-net-worth investors from the wirehouses, citing Cerulli estimates that wirehouses’ share of the HNW investor will drop from 45% in 2011 to 34% by 2014. He also argued that those HNW clients are choosing RIAs because of the fiduciary standard, but expressed misgivings that the SEC might impose a watered-down fiduciary standard on all advice givers, which would be a net competitive loss for RIAs who operate under a ’40 Act fiduciary standard.
In a separate interview later with AdvisorOne, Nally said a watered-down standard could “disarm RIAs,” since brokers could say “We’re fiduciaries, too, except for these 900 disclosures in six-point type.” He said that Mary Schapiro’s SEC has “bigger fish to fry” than a fiduciary standard, notably on money-market funds, and that the Dodd-Frank Act doesn’t require the SEC to impose such a standard, just conduct a study on the fiduciary standard.
However, Nally (left) argued that “we don’t need more regulation; we need enforcement of existing regulations,” and returned to a theme he voiced in the opening general session of the conference: that much of the regulation stemming from the financial crisis, notably Dodd-Frank, does not address the underlying causes of the financial crisis.
He acknowledged that most investors are not aware of whether their ‘advisor’ has a fiduciary obligation to their clients or not, but cited research that when investors are presented with a definition of fiduciary and are given a choice, they overwhelmingly choose a fiduciary relationship. Nally called for a focus on consumer education, but also argued that while “we’re all for better investor protection, we can’t afford another layer” of expensive and expansive regulation “that will choke small businesses.”