Nevada’s regulation would also “likely” encourage investment professionals to migrate from brokerage to fee-based accounts and give up their brokerage relationships, said the groups, who represent the interests of broker-dealers, independent brokers, insurance companies, insurance agents and others who would be impacted by the rule.
“The draft regulations impose a presumption that a B-D owes a fiduciary duty and characterize many routine client interactions as triggering such a duty. Dual registrants are also presumed to be acting as an [investment advisor or investment advisor rep] and are subject to a continuous fiduciary duty for which there is no exemption,” the trade groups said.
“These conditions will likely encourage firms to re-evaluate their brokerage services. B-D accounts represent an important, cost-conscious choice for retail investors and provide access to affordable advice, particularly for smaller, buy-and-hold investors. We would encourage you to strike the presumptions for B-Ds and dually registered firms in the draft regulations,” the groups said.
The groups urged Nevada officials to wait for the SEC to adopt a national standard.
“We believe a national standard provides enhanced investor protection, avoids investor confusion and is much easier to administer and operationalize than an uneven patchwork of state laws,” they concluded.