A uniform fiduciary standard implemented by the Securities and Exchange Commission would hit brokers with $8 million in new compliance costs, according to the Securities Industry and Financial Markets Association.
Updating disclosure documents would cost $3 million, and the initial build-out of compliance systems and training would cost another $5 million, said SIFMA, which represents banks, securities firms and asset managers.
But Ira Hammerman, SIFMA’s senior managing director and general counsel, told AdvisorOne on Monday that BDs “are generally willing to incur” the above mentioned additional compliance costs “in order to arrive at a new fiduciary standard.”
The Financial Planning Coalition of advisory industry trade groups argues that advisors at BDs who deliver advice under a fiduciary standard experience stronger asset growth, and that the conversion of fee-based brokerage accounts to fiduciary, nondiscretionary advisory accounts would impose “little if any additional cost or burden.”
Charles Schwab, however, flipped the scenario around, telling the SEC in its comment letter what it would cost for registered investment advisors to comply with BD rules should the agency decide to include “harmonizing” BD and advisor rules in its fiduciary rule proposal.
Depending on how broadly the commission would apply “harmonized rules — whether to some or all RIAs,” harmonized rules could cost the RIA industry a whopping $1 billion, Christopher Gilkerson, Schwab’s senior vice president and deputy general counsel, told the SEC.
SIFMA, Schwab and the coalition members — which include the Financial Planning Association, the National Association of Personal Financial Advisors and the CFP Board — expressed their views in comment letters to the SEC as part of the agency’s March 1 request for information on the costs and benefits of a uniform fiduciary standard. The comment period ended July 5.
Hammerman told the SEC that “SIFMA remains strongly supportive of a uniform fiduciary standard for broker-dealers and investment advisors when providing personalized investment advice about securities to individual retail clients.”