Fiduciary Links: A proposal for a new way to idenitify PROs
Posted by Bennett Aikin on July 22, 2013
>>>Over at RIABiz, Ron Rhoades continued last week his series of articles shredding FINRA’s record as an overseer of brokers and taking offense to the idea that they would make an appropriate self-regulatory organization for advisers.
We can probably expect the fourth and final installment to hit RIA Biz this week but, thanks to Bob Veres, we’ve already got a preview of what we can expect. Ron’s recommendation is for the creation of a Professional Regulatory Organization that includes a bona fide fiduciary standard as a term of membership and also has a peer review process as part of its oversight procedure. Bob goes a step further in that discussion by suggesting the PRO doesn’t need to wait on any legislative or regulatory imperative, but could instead be formed as a voluntary organization, allowing it to get started sooner than later and giving it time to build an infrastructure that could eventually gain legal recognition as a regulator. One of the great benefits to this approach is that it would make some of the regulatory harmonization debate a moot issue as the new PRO would be a clear denotation of who is or isn’t meeting the highest standards of care for investors.
We’ve seen ideas like this before, SROIIA and Advizent come to mind as recent examples, in addition to the examples Bob provides from the financial planning community. Given that neither Congress nor the SEC appear capable or motivated to provide a structure that clearly identifies where investors can go for advice that is in their best interests, these regulator alternatives might be the best bet out there. The challenge will be identifying an organization that gains real traction in both the fiduciary community and from the retail investors it hopes to serve.
>>>As an aside to the above item, a piece in InvestmentNews explains that, with shakeup in the SEC, the SRO debate is on hold for now and that we can expect the status quo to be maintained for the near future. In effect, it appears that the reset button has been hit on the entire oversight discussion.
Now on to the rest of the best links from last week:
News and columns from the leading trade, consumer, and mainstream media:
- Dodd-Frank, where are you? After 3 years, investment advisers await the impact. [InvestmentNews]
- Letters regarding fees from a Yale professor caused a stir last week and now they're causing headaches for advisors [InvestmentNews]
- Bob Clark highlights Financial Planning Coalition's claim that a fiduciary standard is good for business [Think Advisor]
- Clients are an advisor's biggest competition, says principal survey. [ThinkAdvisor]
- Expert advice from Harold Evensky to educate clients on funding retirement [ThinkAdvisor]
- A look at the pros, cons, and complexities of complete fiduciary delegation for plan sponsors [Pensions & Investments]
- Wirehouse firms are recruiting more independent advisers to their ranks than ever before. [WealthManagement]
- Are annuities a bad idea for retirees? [FinancialPlanning]
From the organizations/associations/government/academia:
- Recommendations for new accredited investor criteria includes requirement to receive fiduciary advice [GAO, see coverage at InvestmentNews]
- New guidance on claims of "free" IRAs [FINRA, see coverage at InvestmentNews]
- FINRA announces increased transparency on mortgage-backed securities [FINRA]
- State retirement coverage dwarfs private industry, according to a recent Bureau of Labor Statistics report. [NAPANet]
From the blogs:
- Why you want a simpler portfolio [The Investment Fiduciary]
- Trending topics for ERISA Plan sponsors [Fiduciary News]
- 401k fee disclosure one year later: What we've learned [Fiduciary News]
- The SEC continues to work on target date funds, but there is still more work to do on risk protection [RIABiz]
- Have alternative investments jumped the shark? [RIABiz]
Articles your clients are reading (or should be):
- Read the first two articles in a six-part series published by Paladin, and written by Mark Mensack: Distinguishing True Independent Professional Advisors from Phantom Fiduciaries, (Part two) and Major Decision: Choosing a 401k Service Provider or Plan Advisor, (Part One) [Paladin]
- Five ways to make investing easy. [US News]
- Why retirement accounts won't help you retire early. [US News]
- Seven major benefits of financial independence. [The Chicago Financial Planner]
Have a link we missed? Leave them in the comments section or email us at blog@fi360.com. For more of the best links during the week, make sure you follow us on Twitter.
