National Association of Insurance and Financial Advisors

SEC Commissioner weighs in on fiduciary

Requiring more concise disclosure would help protect investors and be a better alternative than imposing a uniform fiduciary rule on brokers and financial advisors, SEC Commissioner Michael Piwowar said in prepared remarks before the National Association of Plan Advisors.

"Even if the Commission were to adopt a uniform fiduciary standard, it is quite likely that investor confusion would continue,” Piwowar said.

NAIFA President Juli McNeely called Commissioner Piwowar’s suggestion “insightful” and “valuable,” as the SEC considers a uniform standard of care. “NAIFA has long believed that appropriate, enhanced disclosures could be a viable answer for how to address perceived conflicts of interest, and could do so, if crafted properly, in a way that does not threaten mid-market investors’ access to products, service and advice—a concern raised by Commissioner Piwowar in his remarks.

“NAIFA also agrees with the Commissioner’s concerns about ‘disclosure overload.’ In NAIFA’s view, more is not necessarily better. NAIFA has previously suggested a two-tiered format for disclosure in which a summary type of disclosure document would be provided to all, with a more detailed, second-tier level of disclosure being available upon the request of investors.”

Piwowar also addressed assertions that suitability is a lesser standard of care than fiduciary, saying: “In the ongoing debate about the need to create a uniform fiduciary duty for broker-dealers and investment advisers, it is sometimes asserted that a broker-dealer’s duties have less ‘teeth’ than an investment adviser’s. That claim overlooks the robust regulatory scrutiny to which broker-dealers are subject.”

NAIFA has long said that rules and regulations imposed on registered representatives of broker-dealers go far beyond those requiring them to recommend suitable products. Registered reps must comply with dozens of rules covering nearly every aspect of their businesses, from how they communicate with clients to how they interact with senior citizens; and from how they advertise to how they keep and maintain records.
  • Posted October 7, 2014 IN

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