A Uniform Fiduciary Standard For Brokers and RIAs: Is It Coming And Does It Matter?

On June 12, 2014, Bob Banks spoke to a group that included registered investment advisors, accountants and attorneys. His talk was entitled “A Uniform Fiduciary Standard For Brokers and RIAs: Is It Coming And Does It Matter?” In his presentation, Bob Banks discussed the differences between the suitability standard commonly applied to stockbrokers and the fiduciary standard applicable to registered investment advisors. He noted that the SEC has been ordered by Dodd Frank to study and decide by the end of 2014 whether there should be a uniform fiduciary standard for all financial advisors, but that SEC Chair Mary Jo White has not yet indicated where the SEC stands on the issue. Mr. Banks predicted that at best there will be some “watered down” fiduciary standard that applies to stockbrokers, which will make investor groups unhappy. But, Banks questions whether, in the context of FINRA securities arbitration and securities litigation in court, it will make much difference in deciding the majority of claims brought by investors against financial advisors.