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SEC’s Best-Interest Proposal Has Advisors Stumped

May 16, 2018

Most advisors are on the fence about the SEC’s advisor conduct regulations proposed last month, according to a TD Ameritrade survey cited by FA magazine.

In a poll of more than 5,000 advisors conducted last week, TD Ameritrade found that 87% of investment advisors and dually-registered advisors have either “mixed feelings” or are undecided about the proposal released in April, according to the publication. Advisors aren’t the only ones: Policy experts tell FA magazine the SEC’s proposal — which could result in a massive regulatory overhaul if passed — could lead to confusion among investors too.

“I feel like the SEC is struggling here to try to placate both sides," Duane Thompson, a senior policy analyst at Fi360, tells the publication. "If you are going to create a standard that sounds and looks very similar to the fiduciary duty for advisors, why not just carry out the mandate under Dodd-Frank, [which] proposed the uniform fiduciary standard for both brokers and investment advisors?”

There’s also confusion about the SEC’s proposal on who’s allowed to use the terms “advisor” and “adviser,” according to Thompson and TD Ameritrade managing director Skip Schweiss, who said so at a policy briefing earlier this week, according to FA magazine. While the SEC proposes barring brokers from using the terms, it doesn’t prevent them from using “financial planner” or “wealth manager,” Thompson tells the publication. Furthermore, there’s a large grey area around dually-registered advisors and how investors are supposed to understand when they act as fiduciaries and when they don’t, according to Thompson, FA magazine writes.


The deadline for the comment period on the SEC’s proposal has been set for August 7. Initial reaction from investors has been mostly negative, and fiduciary advocates have slammed SEC chief Jay Clayton’s statement that the new rules would harmonize the currently divergent rules governing investment advisors and broker-dealers.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.