When a model broker-dealer fee disclosure was introduced by regulators and the financial services industry earlier this autumn, investor advocates claimed it was not an end-all, be-all for transparency. At least one of its creators agrees.

“This was a good place to start. Hopefully this will create a momentum for increased transparency with other fees,” said Judith Shaw, who was elevated from president-elect to president of the North American Securities Administrators Association when the guidelines were unveiled at NASAA’s annual meeting.

For nearly a quarter century, Shaw, who holds a law degree and a brown belt in karate, has had her hand in state regulation ranging from jobs with the Maine attorney general’s office to that state’s department of insurance to her current day job as Maine’s chief securities regulator. In the excerpted interview below, she discussed various issues related to investment advisors and the NASAA, which she will lead for the coming year.

FA: How do you respond to criticisms that the fee disclosure guidelines don’t cover commissions, investment advisory fees, 12b-1 fees and revenue sharing among fund families, broker-dealers and insurance companies?

Shaw: We need to take a first step to increase transparency. What we find here in our office in Maine, at least, is we get many inquiries about miscellaneous fees. People understand they are going to pay commissions and advisory fees, but they are often surprised when they learn they are being charged a fee for something like the transfer of an account on the death of a spouse.

FA: What do you see as the role of individual state regulators and NASAA in regulating robo-advisors?

Shaw: Clearly, robo-advisors are going to be big enough to be registered by the Securities and Exchange Commission rather than the states. But while state regulators do not examine advisors with over $100 million in assets under management, we can monitor them for violations of state fraud laws.

FA: Small advisory firms and state securities regulators don’t have a lot of money to spend on cybersecurity. How are your members coping with this reality both in terms of protecting their computer systems and monitoring the IT protections of advisors?

Shaw: This is one of the advantages of an association like NASAA. The individual state securities regulators may not have the resources to hire cybersecurity experts, but as a group of 50 we can develop the expertise. In addition, our examiners can alert small advisors to cybersecurity resources they can use. As far as internal cyber-protection for our members, it should be done on an individual, state-government-wide basis.

FA: What personally identifiable information do state securities regulators have on the clients of advisory firms they examined that could be obtained by a skilled and determined hacker?

Shaw: I don’t want to go there.

FA: How often do state regulators examine advisors?

Shaw: [Every] three to five years on average. In Maine, every newly registered advisor is examined in the first year.

FA: Why is there an increased emphasis by state regulators on financial fraud involving seniors?

Shaw: This is a growing problem because social isolation has increased. The types of communities we grew up in aren’t there. All our families [used to live] in close proximity. Now it is more common [that] children move away. E-mail and the web are also allowing fraudsters to reach seniors more often than they could in the past.