Efforts to create a uniform fiduciary standard for all advisors received support today from LPL Financial, the nation's largest independent broker-dealer.
Responding to a U.S. Securities and Exchange Commission report issued last week that proposed such a standard, LPL voiced support for the study's recommendation, stating it would best serve the interests of consumers.
"We agree with the [SEC] report's recommendation for a uniform fiduciary standard, as we believe this is right for investors, financial advisors and the industry," Mark Casady, LPL's CEO and chairman, said in a written statement. "We are confident this would help drive greater consistency and evenhandedness in the supervision of the broker-dealer and advisory sides of our business."
Casady said a uniform fiduciary standard would also give consumers a clearer understanding of their advisors' roles.
"This would be positive for financial advisors and their clients, the vast majority of whom are neither cognizant of, nor concerned with, different definitions for the standard of care between financial advisor business models," Casady continued.
The SEC, acting at the request of Congress, issued a report last week that recommended a common fiduciary standard for brokers and registered investment advisors who provide personalized investment advice.
The SEC said there's a need for a uniform fiduciary standard "no less stringent than currently applied to investment advisers." The common standard is needed because many retail investors don't understand and are confused by the roles played by investment advisers and broker-dealers, the study said.
The agency was asked by Congress to look at the effectiveness of existing rules as part of the Dodd-Frank financial services overhaul law enacted on July 21. Broker- dealers currently are held to a suitability standard that calls for advice that meets their clients' needs when a product is sold, instead of the fiduciary duty followed by registered investment advisors to put their clients' best interests first.