Forget the DOL, This State Will Have its Own Fiduciary Rule
The New Jersey Bureau of Securities is expected to seek public comment next week on a proposal requiring financial advisors working in the state to put their clients’ interests first — and other states may soon follow New Jersey’s lead, according to InvestmentNews.
Unlike legislation introduced in the New Jersey and New York legislatures, this rule would require advisors to act in their clients’ best interest rather than merely disclose whether they are acting as fiduciaries, the publication writes.
In addition, the rule is likely to go into effect much faster than legislation, since New Jersey’s securities bureau reports to Gov. Phil Murphy and wouldn’t fall victim to bipartisan bickering in the state legislature, according to InvestmentNews.
However, the industry could mount a challenge to the rule — and it would be more likely to get overturned in court than a law, the publication writes.
Nonetheless, other states, particularly those with Democratic governors or Democratic majorities in their state legislatures, could jump on board with their own standards to challenge a perceived disregard for investor protection from the Republican administration of Donald Trump, according to InvestmentNews.
Nevada already has a fiduciary law on the books, although the state’s securities watchdog hasn’t proposed rules to implement it, the publication writes.
Meanwhile, state fiduciary standards could conflict with investment advice rules expected from the SEC in the next few months, according to InvestmentNews.