Recent statements by two brokerage industry leaders suggest a new way for fiduciary advocates to reframe the fiduciary regulatory battle. Think “disruptive innovation.”
First, SIFMA president Ken Bentsen, the voice of the brokerage industry in Washington, recently wrote an extraordinary column on fiduciary duty rulemaking. Extraordinary in how a new bold and unfounded assertion in the column, an assertion that even surpasses prior SIFMA bold and unfounded assertions, helps Bentsen conclude that the DOL proposal “could do more harm than good.”
Bentsen argues that DOL fiduciary rulemaking is unnecessary because investors are doing just fine under current broker-dealer rules. He writes: “Broker-dealers act in their clients’ best interest … (and) are held to high industry standards.”
Bold assertions are nothing new at SIFMA. John Taft, then SIFMA chairman, told Congress in October 2009 that “SIFMA’s vision of a harmonized fiduciary standard is even stronger, and more pro-investor, than any other alternative we have heard advanced.”
Taft’s bold 2009 statement is apparently insufficient in 2014. Bentsen now says that broker-dealers already adhere to a “best interest” standard and, apparently, already meet the “more pro-investor” standard Taft advocated in 2009. The obvious conclusion: Check. Job done. No rule-making needed.
I present this as a terse reminder of Washington ways. Fiduciary advocates, understandably, complain that fiduciary opponents succeed in Washington, in part (how does one say this nicely?) by making statements that are clearly dubious or plainly false. This complaint is valid, but so is the comment that politics isn’t beanbags. Since when were politicians and lobbyists held to the fiduciary standard of ‘utmost good faith?’ This is Washington.