August 30, 2010
I am a financial advisor who has operated under both the fiduciary standard and the suitability standard for years. I do not feel that it is necessary or will be of much benefit to securities customers to adopt a single fiduciary standard. As the RAND study found customers might be confused about the intricacies of exactly how advisors are regulated but they are happy with their relationships, which is most important. The suitability standard that is currently in place for B/Ds is very rigorous and in my experience more stringently enforced than the fiduciary standard. The fiduciary standard would limit the abilities of some advisors who represent or are sponsored by product manufacturers. It would significantly disrupt the distribution landscape for securities products. This would serve to hurt clients, clients who are generally happy with what they are getting. As any advisor can attest to, if a client is unhappy with the products they are being presented they simply move on to a different advisor.
A universal fiduciary standard might sound good but it will disrupt the distribution and advisor community and as a result damage securities customers. The suitability standard adequately protects clients and should remain intact. Enforcement by FINRA and SEC should be the focus, not new regulations.