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Coalition of RIAs Seeks to Sway SEC over Advisor/Broker Definitions

Six fiduciary groups have joined forces to try and ensure the SEC makes the difference between “advisors” and “brokers” explicit when setting standards of conduct for the industry.

A coalition of national financial advisor groups have launched a campaign to urge the Securities and Exchange Commission, as well as the public, to differentiate between “advisors” and “brokers” when contemplating the commission’s proposed Regulation Best Interest standards for FINRA-licensed brokers and SEC-registered advisors.

The groups, which are all SEC-registered investment advisors, are rallying their members to write to the commission to outline exactly what they do for clients to distinguish from what brokers do, and how any regulations settling over the industry need to make that difference explicit.

"Most RIAs believe the proposed rules, introduced April 18, do not adequately explain broker and adviser differences,” said Knut A. Rostad, president of the Institute for the Fiduciary Standard. “The proposed rules depict broker and adviser conduct as essentially the same, like identical twins. This depiction is confusing and wrong. The legal, contractual, business and cultural differences dividing brokers and advisers are important, and must be clearly stated and explained.” 


The SEC is currently seeking public comment—through August 7—on Reg BI. The SEC’s rules come on the heels of the Department of Labor’s fiduciary rule, which was officially killed by the courts this month. 

The groups that have signed on to the “Raise Your Voices” campaign include the National Association of Personal Financial Advisors, the Garrett Planning Network, the XY Planning Network, the Alliance of Comprehensive Planners, The Committee for the Fiduciary Standard and The Institute for the Fiduciary Standard.

“Let’s take an example from the medical field as a way of highlighting the differences between a broker and an RIA: Consumers shy away from asking for prescription advice from a pharmaceutical salesperson—they know that a trained medical doctor can help them make an informed choice, said Jim Davis, president of the ACP Board of Directors. “The SEC can best serve the public by making the differences between a financial salesperson and a fiduciary advisor crystal clear.” 

TAGS: Industry
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