A group of consumer and financial organizations is asking the SEC to move forward carefully, but expeditiously, in its rulemaking to extend the fiduciary standard to broker-dealers.
In a letter to the SEC, the organizations warned that ill-advised rulemaking could cause more harm than no rulemaking at all. At the same time, the organizations advocated for the SEC move forward in the lengthy process. The SEC has said the economic analysis of the rulemaking will be done early next year.
The economic analysis will apply to the uniform fiduciary rules the SEC is developing to apply to broker-dealers who provide retail investment advice. Currently, broker-dealers do not have to meet the fiduciary standard that is applied to advisors.
The letter asks SEC Chair Mary Jo White to ensure that the commission’s economic analysis of the proposal will be “well-reasoned” and “lay the groundwork for a strong, pro-investor policy.”
The commission has “gone astray” in these and other areas and therefore “has been unable or unwilling over the past 25 years to develop a rational policy framework for the delivery of personalized investment advice to retail investors. We urge the commission to rectify this problem now,” the letter says.
The letter, which was released Tuesday, is signed by the Consumer Federation of America, Fund Democracy Inc., Certified Financial Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors.
“We have all long advocated for a uniform fiduciary standard that would, consistent with Section 913 of the Dodd-Frank Act, apply to broker-dealers when they offer personalized investment advice to retail investors. With this letter, we want to make it perfectly clear that we believe a thorough, well-reasoned economic analysis will offer strong support for rulemaking,” the group said in a statement released with the letter.