Goldman Sachs Group Inc.'s chairman and chief executive, Lloyd Blankfein, also told the commission investigating the financial crisis that he supports a fiduciary standard for brokers who provide advice to retail investors.
"The fiduciary standard puts the interests of the client first. The advice-giving functions of brokers who work with investors have become similar to that of investment advisers. But, investors may not understand that the person they are getting advice from may be regulated under different rules and regulations," he said, in prepared testimony.
Knut Rostad, chairman of the Committee for the Fiduciary Standard, an advocacy group, called Blankfein's comments "huge."
"[He's] a symbol for an industry that until eight months ago has staunchly opposed the fiduciary duty," Rostad said.
Insurance groups, however, such as the National Association of Insurance and Financial Advisors and the National Association of Independent Life Brokerage Agencies, or NAILBA, may exert their influence on some senators. They say Dodd's draft legislation doesn't take into account how a fiduciary duty would affect the insurance marketplace.
"Since insurance folks are dealing with specific products, suitability is a more important standard of care," said Alex DelPizzo, an insurance industry consultant with Washington lobbying firm Winning Strategies. "The insurance industry's distribution model would be altered, we'd have less people selling products and consumers would be adversely affected," he said.
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