The Financial Planning Coalition recently released a study it says debunks the notion that imposing a fiduciary standard on broker-dealers would increase their compliance burdens.

The report was based on a survey conducted in March 2012 that polled 498 broker-dealers and financial advisors at wealth management firms that work primarily with individual clients and their families. It found that broker-dealers who have a fiduciary responsibility because they are also registered investment advisors actually spend less time on compliance (5%) than brokers who are not RIAs (8%), according to the coalition.

“We have long believed that the notion fiduciary care is more expensive for broker-dealers is just a red herring and not true,” said Marilyn Mohrman-Gillis, managing director for public policy and communications at the CFP Board of Standards, a coalition member.

Morhman-Gillis and Sophie Schmitt, senior analyst for the Aite Group, which prepared the report, said there could be several reasons for the reduced time spent on compliance:

• Dually registered broker-dealers typically work for large firms with staffs that can do much of the paperwork.
• Fiduciary obligations are based on broad principles that are easier to follow day to day than “subparagraph A, Line 2c” detailed rules.
• For the dually registered, compliance with general SEC fiduciary obligations becomes a greater focus than Finra broker-dealer guidelines.

The study also noted that 60% of brokers are already subject to SEC fiduciary obligations because they are also registered investment advisors (while 40% of
financial advisors are licensed as representatives of broker-dealers).

While not increasing costs, the higher ethics standard can help lead to greater revenues, according to the study. It noted fiduciary registered representatives and financial advisors experienced stronger client asset growth and revenue growth over the last five years than registered representatives who do not deliver fiduciary services to a majority of clients.

The report also showed widespread support for a fiduciary standard within the broker-dealer community: 56% of the registered representatives questioned said a fiduciary obligation is appropriate for all categories of financial services professionals who deliver personal investment advice to retail customers.