Regulators will also focus on the conflicts in recommendations of certain account types made by dual registrants—”especially those who recommend an investor’s buy-and-hold investments be placed in a managed account where the advisor can receive an ongoing fee, while the complex, high-commission products are placed in a brokerage account where active trading will be most profitable to the advisor,” Lazaro added.
The SEC may want to stop dual registrants from offering both brokerage and advisory accounts to the same customer, said Ron Rhoades, associate professor at Western Kentucky University and director of its personal financial planning program, who was also on the press call sponsored by the Institute for the Fiduciary Standard. “Some countries like the U.K. have severely limited when brokerage accounts can exist,” Rhoades said.
With new SEC Chairman Gary Gensler at the helm and three Democrats dominating the five-member commission, he added that the agency should move quickly to rectify the major gaps in fiduciary regulation. “We might have this very narrow window where we have this pro-consumer SEC for the next few years. Maybe this is the time to get things accomplished and hopefully they will not be reversed with the next administration,” Rhoades said.