As the first millennial to take the reins of the North American Securities Administrators Association, Vermont Financial Regulation Commissioner Michael Pieciak, 35, has his eye trained on some pressing goals. For one, he wants to work with the Securities and Exchange Commission to encourage the agency to add a broker fiduciary-like standard to its controversial Reg Best Interest proposal.

“I think there is a benefit to having a national fiduciary standard and working with the SEC to get that, but states still have the responsibility to protect investors,” Pieciak told Financial Advisor magazine.

The former Skadden, Arps, Slate, Meagher & Flom attorney, who became NASAA president in September, said he has already had productive meetings on NASAA’s goals with SEC Chairman Jay Clayton, SEC commissioners and the SEC drafting committee. He expects to deliver a follow-up letter to the agency soon. It will be NASAA’s third comment letter on the SEC’s proposed Reg Best Interest.

NASAA’s position on a fiduciary standard for brokers represents an attempt to coax the SEC towards a more investor-friendly approach. It comes after the Trump Administration’s Department of Labor vacated its own fiduciary rule promulgated during the Obama administration. Ever since, the SEC has struggled to craft its own Best Interest standard and encountered widespread opposition from various consumer and advisor organizations.

The SEC’s Reg BI is a controversial proposal that would require brokers to mitigate their conflicts of interests, but does not require them to be fiduciaries, critics say. Broker conflicts cost investors some $18 billion annually in added fees, commissions and inferior investment performance, according to a White House report.

It remains to be seen whether the SEC will be able or willing to implement a rule requiring brokers to meet fiduciary standards when working with clients. “At this time, we don’t have any plans to pursue a model fiduciary regulation, but if Reg BI is viewed by state regulators and legislators as not going far enough to deliver fiduciary standards to the broker-dealer community, I wouldn’t rule that out,” Pieciak added. Both New Jersey and Nevada have passed or are pursuing their own fiduciary standards, but experts don’t expect there to be a deluge of copycat state legislation or regulation.

At this point, Pieciak said, he is “totally focused on engaging with the SEC on what we view as improvements to Reg BI. We will provide the chairman with additional documents and examples, which we look forward to submitting. We think Reg BI has a lot of good in it. It was a step up for the broker-dealer community in terms of a conduct regulation, but we do take some issue with the guidance and pointed out where we think it may nullify investor best interests,” the regulator added.

“Another concern is the level where disclosure alone can totally satisfy conflicts of interest,” said Pieciak, who has been following evidence of investor confusion that has surfaced in the SEC’s own testing of the proposal and its ancillary customer relationship summary (CRS). The disclosure document is supposed to clearly explain to investors the differences in advisor and broker fees, services and legal protections, but appears to fall short.

“There are other industries where disclosure alone doesn’t mitigate conflicts either,” the NASAA president said.

The association will also focus on how the  SEC  proposal applies  conduct standards to IRA rollovers. The need to apply Reg BI to rollovers is “something we’ll highlight and focus on,” he said.

Pieciak said it is very important for him to promote uniformity in regulation while preserving state authority, not just in sales conduct and fiduciary regulations but in all arenas. “When you ask our members what their biggest issues are, uniformity and preservation of state authority are their number one concerns, so where appropriate, we will drive that,” he said.

As a millennial himself, Pieciak hopes the advisor industry will focus more on his generation now, rather than waiting for millennials to reach retirement age. “There’s a huge need for financial advice that millennials have this year and will continue to have as the huge transfer of wealth from boomers to millennials takes place. Statistics show millennials have delayed a lot of the hallmarks of adulthood like buying homes, getting married, having children … but once they have money to invest, they’ll need advice.

“From a business perspective it’s smart to work with these clients now,” Pieciak said. “Even though millennials are so phone, app and social media based, at the end of the day when faced with financial decisions, they rely on the people they trust. So it would be helpful to the industry and to millennials, too, to work with them.”

The regulator said he was shocked that 25 percent of millennials who have retirement savings are fully invested in cryptocurrencies. “It is shocking to me that this was the case, considering how volatile these offerings have been and how many have failed. It’s fine if anyone wants to invest in cryptocurrencies, but millennials need help with the very basic concept of diversification, understanding alternate asset classes and being able to understand which cryptocurrencies will work for them. These are areas advisors can help highlight,” Pieciak said.

Recent statistics showing that some 80 percent of initial coin offerings were deemed to be scams in 2017 makes good investment advice that much more needed for younger generations, he said.

Since many millennials haven’t accumulated significant assets yet, traditional asset-based fee models are unlikely to entice the industry to work with the group. While regulators have not traditionally been fans of hourly or retainer-fee advisory models, Pieciak recognizes the industry may need more flexibility when it comes to working with millennials and middle-income clients. “I think from my perspective that we have to keep an open mind about fee arrangements and business models, especially when we talk about systemic changes in the industry and demand from consumers and investors regarding the way they want to receive investment advice,” he said.

Pieciak is not only open to new business models, but also is tuned into the importance of balancing investor protection with capital formation. Some 78 percent of the 17,000 advisors NASAA regulates are one- or two-person shops, he said.

Which, unfortunately, makes state RIAs prone to cyberattack, the regulator added. Cyber criminals are 300 percent more likely to target a financial services firm than a traditional company and 61 percent more likely to zero in on a small firm.

“That’s our RIA industry and that’s why we are proposing our new cybersecurity model,” Pieciak said. The model, out for comment until November 26, is principles-based rather than prescriptive, he added. For the first time, the model would require state-registered RIAs to do a cybersecurity risk assessment and create practices that safeguard “reasonably anticipated threats or hazards to the security or integrity of client records and information.”

In May, Pieciak is kicking off a new program at NASAA’s 2019 Public Policy Conference in Washington, D.C., designed to raise awareness of the role of state securities regulators. “Every state regulator will have the opportunity to invite a key state legislator to the conference,” the regulator said. “The goal here is to help the regulator build important relationships so they have people who understand our deliberative process when they introduce model regulation.”

If the pilot works, each regulator will be encouraged to bring lawmakers from both their state house and senate to future NASAA policy conferences, Pieciak said.