Advisors in the state, however, welcome the possible new standard, even if it would create more fee-only fiduciary competitors.

“It’s the right thing to do for investors and the way we’ve practiced for 35 years,” said Thomas Meyer, CEO of the Meyer Capital Group, a $1 billion RIA in Marlton, N.J.

“Do I think it will ever become to the point where the big wirehouses become us? No, I don’t. These are the same people who scoffed at us. Now they all want to become us, but without the fiduciary regulation. It boggles the mind right now that someone can be an advisor on Monday and Tuesday, but a stockbroker on Wednesday through Friday, and charge an investor with $20,000 a 5 percent commission,” Meyer said.

“There’s conflicts across the board in the brokerage industry,” Meyer added. “The real conflict is there are much better alternatives to the product charging 5 percent, but they don’t pay the broker enough. Under Finra rules, it’s still a suitable product, so the sale is OK.”

New Jersey’s fiduciary rule would change that.

While Morgan Stanley threatened to pull out of Nevada if the state proceeds with a fiduciary rule, New Jersey is also prepared for that industry threat.

"Empirical results provide no evidence that the broker-dealer industry is affected significantly by the imposition of a stricter legal fiduciary standard on the conduct of registered representatives….These results provide evidence that the industry is likely to operate after the imposition of fiduciary regulation in much the same way it did prior to the proposed change in market conduct standards that currently exist for brokers,“ the New Jersey securities bureau said.

The survey results are from a study published in the Journal of Financial Planning, "The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice," which explored the fallout for broker-dealer reps in states that impose a fiduciary duty.
 

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