A group of leading financial advisors has met with Washington officials and let them know that fiduciary principles should apply to all those giving investment advice.
The group, dubbed The Committee for the Fiduciary Standard, met July 29 with SEC commissioners, a Treasury official and Congressional staff. “We felt strong interest from everyone we met. Although no specific commitments were made, our takeaway was that all participants understand and believe in the application of the five core fiduciary principles to any and all who provide (or purport to provide) investment advice,” says Harold Evensky, a committee member and president of Evensky & Katz, a registered investment advisor based in Coral Gables, Fla.
During its meeting with SEC Commissioners Elisse B. Walter and Luis A. Aguilar, the committee pointed out sharp differences between fiduciary and “arms length” standards and explained how five core fiduciary standards would apply in various circumstances in which investors were receiving advice.
Also on July 29, the SEC announced separately that its Investor Advisory Committee has agreed upon a far-reaching agenda that includes addressing whether all financial intermediaries who provide investment advice should be subject to the same fiduciary duties and how those duties should be defined. Aguilar is the sponsor of the Investor Advisory Committee and its chief liaison to the SEC.
The committee of financial advisors identifies these five core principles of the fiduciary standard:
• Put the client’s best interests first;
• Act with prudence; that is, with the skill, care, diligence and good judgment of a professional;
• Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts;
• Avoid conflicts of interest; and
• Fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.
The Committee for the Fiduciary Standard already has:
• Called on Congress to adopt the authentic fiduciary standard in Wall Street reforms and asked that Congress ensure that investors’ best interests are made the number-one priority in new legislation
• Introduced the five core principles of the authentic fiduciary standard
• Urged investors, professionals and all interested market participants to ‘vote’ in support of the five core fiduciary principles by signing the Committee’s online petition
• Been invited by staff members of the House of Representatives Committee on Education and Labor to provide assistance on HR 2989, a Bill intended to introduce fiduciary and fee disclosure requirements for those who give advice to retirement plan participants.
In addition to Evensky, the fiduciary committee’s members are Blaine Aikin, fi360; Clark M. Blackman II, Alpha Wealth Strategies; Gene Diederich, Moneta Group; Sheryl Garrett, Garrett Planning Network; Roger C. Gibson, Gibson Capital LLC; Matthew D. Hutcheson, Independent Pension Fiduciary; Gregory W. Kasten, Unified Trust Company; Kate McBride, Wealth Manager; Fred Reish, Reish, Luftman, Reicher & Cohen; Ronald W. Roge, R. W. Roge & Company; and Knut A. Rostad, Rembert Pendleton Jackson.
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