Gearing up for more stringent regulations ahead, SIFMA is calling on regulators to better coordinate efforts and craft a business-model neutral fiduciary standard.
We have different regulators trying to achieve the same outcomes, and not always coordinating, Kenneth Bentsen Jr., president and CEO of SIFMA, told attendees at the industry associations annual year-in-review conference in New York City Thursday.
Specifically, SIFMA points to the separate efforts by the SEC and the Department of Labor to establish a uniform fiduciary standard.
Although the industry group supports the adoption of a uniform fiduciary standard by the SEC, it warns that the two agencies could produce differing rules that could add new costs and reduce investors choices. In particular, SIFMA says, the Labor Department is considering a revision of its definition of fiduciary that could affect whether retail brokers, prime brokers, institutional trading desks and those who work with pension plans must adhere to the standard.
SIFMA is also calling on the SEC to take the lead in crafting a uniform fiduciary standard that would be business-model neutral. It shouldnt favor the investment advisor model over the broker-dealer model, says Ira Hammerman, SIFMA executive vice president and general counsel.
The SECs adoption of a new fiduciary standard under Dodd-Frank has been anticipated for some time, but implementation of the 2010 law is behind schedule with regulators and industry participants only about half-way through enacting. Its been a much more arduous and complicated process because its a complicated law with a lot of moving parts, Bentsen says.
Some aspects of compensation are also due to come under increased regulatory scrutiny, according to Hammerman. SIFMA says it is generally supportive of the initiative FINRA is expected to file with the SEC requiring firms to disclose to clients compensation details when a financial advisor leaves one firm to join another. The rule change is intended to improve clients awareness of how their advisor is paid.
SIFMAs economic advisory roundtable also issued its forecast for economic growth in 2014, anticipating that the economy would grow 2.7% because of strengths in the housing market and increased job growth. This was slightly higher than the groups earlier forecast, made in June, which anticipated growth of 2.6% in 2014.
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