When he testified two weeks ago at the first of N.J.’s hearings on its proposal, SIFMA Associate Counsel Kevin Carroll argued that it is the SEC’s role and not states’ to set broker-dealer standards when he testified two weeks ago at the first of N.J.’s hearings on its proposal. “We urge the Bureau to await the conclusion of the SEC’s Regulation Best Interest rulemaking process before moving forward with its own fiduciary proposal,” he said.
But N.J. has said it believes the SEC proposal does not go far enough, which is why a uniform standard is needed. "The bureau believes that this uniform standard protects investors against the abuses that can result when financial professionals place their own interests above those of their customers," the document states, noting both the lack of a Labor Department fiduciary rule, struck down by a federal appeals court, and what it suggests is a weak SEC advice proposal.
"In light of these federal developments, investors remain without adequate protection from broker-dealers, who, under the suitability standard, are permitted to consider their own interests ahead of their client's interest when making investment recommendations," N.J.’s proposal states.
On the side of advisors and planners, Financial Planning Association (FPA) representative John Crosby told N.J. regulators today that the group wants to see “a uniform fiduciary standard that would apply to both broker-dealers and investment advisors, when providing personalized investment advice to retail investors, that is not less stringent than the existing fiduciary standard under the Investment Advisers Act of 1940.”
He was joined by Institute for the Fiduciary Standard President Knut Rostad, who told N.J. regulators: “New Jersey has a unique opportunity to make an important difference in the journey of fiduciary duties in the early 21st century.” Rostad is a strong proponent of uniform conduct standards that would require brokers to mitigate conflicts of interest or obtain written consent from investors stating they have been informed of the conflicts and their implications.