When it comes to the fiduciary standard that investment advisors have lived by for 77 years, neither proposed delays and industry lawsuits nor infighting across regulatory lines should be allowed to weaken any future iteration of advisor rules, TD Ameritrade Institutional Managing Director Skip Schweiss told Financial Advisor magazine.

Schweiss, who works with 5,700 investment advisor firms as the head of Advisor Advocacy and Industry Affairs at the industry giant, discussed the future direction of regulation and the fiduciary debate as the TD Ameritrade’s 4th Annual Advocacy Leadership Summit was about to get underway in Washington, D.C.  

He's been a long-time proponent of a strong, industry-wide fiduciary standard.

FA: It’s a little like making odds in Vegas at this point, but what do you think is going to happen to the Department of Labor’s fiduciary rule, now that the agency has asked for a delay?

Schweiss: One of the things I like to clarify for people is the DOL rule went into effect June 9. The foundation of the rule—you must give advice that is in the best interest of investors—is still there. Some of the disclosures and contracts and warranties got pushed back with the OMB delay, which will probably get approved. It feels like what the DOL is trying to do is put a standard in place while putting some of the more onerous compliance components of the rule on hold perhaps to allow the SEC (Securities and Exchange Commission) to step in and apply the rule to all investment accounts to have more consistent regulation for all practitioners.

FA: What end result are you hoping for? In a perfect world, should there be a rule that goes beyond the DOL’s limited reach with regard to retirement rollover accounts to apply to both brokers and advisors?

Schweiss: We hope so. It is difficult for Finra (Financial Industry Regulatory Authority) service providers to have different sets of standards as they move between retirement and taxable accounts. Consumer advocates would also like to see to see this fiduciary standard extended. Our hope would be that there would be a good investor protection standard at the end of the day.

FA: What would your ideal fiduciary rule do?

Schweiss: It really is tricky as the folks at the SEC have been telling us for years. The [DOL’s] ERISA standard does not allow for commissions to be paid to advisors for providing advice. The DOL certainly didn’t want to ban commissions, but they’re banned by ERISA, so they had to create an exemption from the rule. So if the SEC did something they’d have to cross over some of this as well. That’s where this gets tricky.

FA: Do you worry about some of the most vulnerable investors out there if regulators fail to create an industry-wide fiduciary duty that puts investor interests first? It seems particularly important as billions of dollars in ERISA protected 401(k) and defined contribution begin to flow to retirees for the first time?

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