In particular, he notes, FSI is concerned that potentially excessive compliance demands incurred by broker-dealers to adhere to a uniform standard would boost their costs and could make it uneconomical for them to serve smaller retail clients who don't meet the heftier asset minimums that many investment advisors require.
Where the issue goes next is in the hands of the SEC. Bellaire says he's been told by SEC staff members that the agency has many items on its plate and that the fiduciary standard of care issue isn't exactly its most pressing issue.
"It doesn't appear to be on the fast track there," Bellaire says. He notes that it's his understanding that the SEC is preparing for a request for information to study the economic impact of a uniform standard, which the agency would have to digest before developing a rule proposal that would go out for comment. And all of that is a long process.
"I'm not sure we'll see a final rule in 2013," Bellaire says. "I think it's a long-term project with the SEC."
An SEC spokesman said nothing is imminent on the uniform standard of care issue. In fact, there's no guarantee anything will come of the issue at all because Dodd-Frank mandated only that the SEC conduct the study--any subsequent rule-making is optional.
Watered Down Better Than High And Dry?
Some folks in the investment advisor community fear a uniform standard of care will dilute the fiduciary standard they currently abide by. "Some people are worried about a watered down version," says Paul Auslander, president of the Financial Planning Association. "I think a watered down version is better than nothing."
To Auslander, creating a fiduciary standard across the board would "raise the bar for the profession."
Don Trone, for his part, believes the consensus needed to achieve a uniform fiduciary standard will result in a weakened standard. But that could lay the groundwork for tougher standards down the road. "The courts who hear the first breach-of-fiduciary cases might enact higher standards than what's defined by the regulators," he says.
Clearly, the fiduciary standard of care issue won't be resolved anytime soon. Meanwhile, the best practices detailed in the fiduciary survey taken by 500 advisors are a prescription for putting clients' best interests first whether or not a uniform standard of care is adopted by regulators.
That's a point raised by Sean Walters, executive director and CEO of the Investment Management Consultants Association, an education provider and certification body whose members include asset managers, full-serve brokerages and independent financial advisors.