Maryland lawmakers in the state senate and assembly have introduced a bill that would require broker-dealers, insurance agents and investment advisers to act in the best interest of their clients without regard to their own.
The fiduciary requirement is part of a much broader bill known as the Financial Consumer Protection Act of 2019, which paves the way for the Maryland Commissioner of Financial Regulation to craft state fiduciary regulations, much like Nevada’s legislation did.
“As was true of Nevada and will be true in New Jersey, the impact of the Maryland law will depend upon the manner in which it is implemented by regulations,” says Marcia Wagner, founder of the Wagner Law Group.
“What stands out [in the Maryland bill] is language is similar to Nevada,” says Andrew Remo, director of legislative affairs at the American Retirement Association. “It gives the Maryland consumer protection agency wide latitude to craft regulations.”
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Remo is concerned that the Maryland bill, like the Nevada bill and subsequent proposed regulations, does not provide an exemption for ERISA plans, whose investment advisors are already required to be fiduciaries. “We would like to see that made clear in statute.”
Individual states are proposing their own fiduciary rules in the absence of federal regulations. A Labor Department fiduciary rule that would have applied to advisors and broker/dealers was quashed by a federal appeals court last year, a decision the current White House let stand without appeal.
The SEC is working on its own “best interest” proposal, which is less restrictive than a fiduciary rule but that is not expected to be finalized until later in the year at the earliest.