Advisory Groups To Hold Fiduciary Forum
The debate over the fiduciary standard is far from over. For starters, the Securities and Exchange Commission in late July published a request for a 30-day public comment period on the standard of care obligations of broker-dealers and investment advisors.
And through the rest of this year, the SEC will be immersed in a six-month study on the issue as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Meanwhile, a group of four financial advisor organizations with skin in the game, along with the Committee for the Fiduciary Standard, will jointly sponsor a forum September 24 in Washington that will provide input into the SEC study. The event site was pending as of press time.
In addition to the Committee for the Fiduciary Standard, the event co-sponsors are the Certified Financial Planner Board of Standards, The Financial Planning Association, The Financial Services Institute and The National Association of Personal Financial Advisors.
Speakers will include various academic and policy research experts.
"As the first major review with prospective rulemaking on the duties of brokers and advisors in 70 years, and on the heels of the financial crisis, to say that the SEC's work here is vital to investors is an understatement," said Knut A. Rostad, chairman of the Committee for the Fiduciary Standard.
Plan To Curb Mutual Fund Fees Has Critics
(Dow Jones) The Securities and Exchange Commission on July 21 revealed its proposals to change fund fee structures, in particular capping how much mutual funds can charge customers for the costs associated with selling their products.
But the plans don't address revenue sharing between funds and brokerage firms, an area of the industry with very little disclosure. That's a problem, some say.
"If you put a cap on how much can be paid out to distribute funds, and that cap doesn't satisfy the market, the market will figure out other ways to get paid," said Barry Barbash, a lawyer at Willkie Farr & Gallagher who was head of the SEC's investment-management division for five years in the 1990s.
Concerns that firms will compensate for reduced distribution fees by using revenue-sharing agreements add to a growing list of criticism about the proposals, which were years in the making.
The SEC plans, which are subject to a 90-day comment period before they can become official, would see changes to 12b-1 fees and sales loads. Sales loads are fees charged by funds but paid to brokers who sell the funds, while 12b-1 fees can be used to help pay for the marketing and distribution of a fund, which can include payments to brokers.