Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Broker Dealers

Massachusetts Fiduciary Plan Looks Awfully Familiar, Lawyers Say

Your article was successfully shared with the contacts you provided.

Massachusetts’ fiduciary proposal is “very similar” to the one floated by New Jersey and may indicate that “an emerging model of regulation with respect to uniform standards of conduct is afoot,” according to members of Stradley Ronon’s Fiduciary Governance Group.

The Stradley Ronon attorneys argue in a just-released legal alert that such a model regulation “would be a double-edged sword in that it would result in less variance among the state approaches to standards of conduct, while also magnifying the scope and interpretive issues of, and preemption issues related to, the New Jersey proposal.”

Secretary of State William Galvin, the state’s top securities regulator, released Friday the state’s plan, which would apply a fiduciary conduct standard on broker-dealers, agents, investment advisors and investment advisor representatives when dealing with their customers and clients.

The Massachusetts’ proposal is the first formal state response to the Securities and Exchange Commission’s Regulation Best Interest for brokers, and the securities regulator’s advice-standards package, which the agency passed on June 5.

George Michael Gerstein, an attorney with Stradley Ronon and a member of the Fiduciary Governance Group, told ThinkAdvisor in a Tuesday email that while it’s too early to tell if more states will join Massachusetts, “we may start to see the early movers [states] coalesce around an [fiduciary] approach, as we appear to be seeing with New Jersey and Massachusetts.”

In releasing the Massachusetts plan, Galvin said “the SEC has failed to provide investors with the protections they need against conflicts of interest in the financial industry, with its recent ‘Regulation Best Interest’ rule.”

Meanwhile, New Jersey announced that it plans to hold hearings on its uniform fiduciary standard on Wednesday and has extended the comment period on its fiduciary rule to July 18.

Comments are due on Massachusetts’ plan by July 26.

Broker Marketing Blitz

Knut Rostad, president of the Institute for the Fiduciary Standard, said on a Monday webcast that, since the passage of Reg BI, RIAs need “to speak in new ways about what they do in comparison to broker-dealers.”

RIAs, he advised, must “disgard the legalese and phrases that we as an industry have been too dependent upon for years.”

Rostad said his group plans to distribute to members this week a one-page document that he called a “real fiduciary statement of affirmation” that will provide an opportunity for advisors “to sign off that he or she affirm their adherence” to fiduciary practices.

Allan Slider, founder of, said on the webcast with Rostad that since 2011, his mission has been to “elevate the visibility of fee-only advisors.”

Broker-dealers, he said, “can now claim that they are legally required to act in their clients’ best interest. And this is the same message, almost verbatim, that most fee-only and fiduciary advisors included on their websites and marketing materials for years.”

Now, he said, “it can be hijacked by broker reps selling for commission. The amount of money spent by broker-dealers and wirehouses — all the way down to the individual reps — to promote this as pro-consumer is going to be mind-boggling,” and each broker-dealer “is going to try and outdo the  other and their collective messages are going to dominate the internet, social media, television and print.”

As fiduciaries, Slider said, advisors “must get the message out to the public that you if work with a broker, you’re likely being sold, and that there’s a difference between being sold and receiving true guidance.”

— Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.