Piwowar says it's time for SEC to 'reassert its role' on investment advice standards

As DOL fiduciary rule stalls, acting agency chairman seeks to have SEC step in

Apr 21, 2017 @ 2:04 pm

By Mark Schoeff Jr.

Securities and Exchange Commission Acting Chairman Michael Piwowar said on Friday that the agency should take the lead in setting investment advice standards, a position that he said is more likely with President Donald J. Trump in office.

An outspoken critic of the Department of Labor's fiduciary duty rule, Mr. Piwowar expressed support for the implementation delay that recently went into effect while the DOL revaluates the regulation as directed by Mr. Trump in a Feb. 3 memo. That review could lead to the modification or repeal of the regulation, which was finalized during the Obama administration.

The DOL rule mandates that financial advisers act in the best interests of their clients in retirement accounts. Mr. Piwowar said that determining advice requirements is the SEC's job, the same point made by financial industry opponents of the DOL rule.

"We have an opportunity, with a changeover in administration now, for the SEC to reassert its role in this space," Mr. Piwowar said a Mutual Fund Directors Forum conference in Washington. "That's something that I look forward to having discussions [about] with the new chairman."

Mr. Piwowar, a Republican, has headed the agency since former Chairman Mary Jo White stepped down on Jan. 20, the day Mr. Trump was inaugurated. Mr. Trump's nominee for chairman, securities lawyer Jay Clayton, is awaiting a Senate confirmation vote.

Although Mr. Piwowar likely only has a couple weeks remaining as acting chair, his stance on fiduciary duty could influence Mr. Clayton, who did not address the topic at his Senate confirmation hearing. That prospect concerns Kate McBride, a founder of the Committee on the Fiduciary Standard.

"Mr. Piwowar has never been an advocate for investors," Ms. McBride said. "So, if he's looking for the SEC to reassert itself, it's probably not to provide investors with more protection from deceptive sales practices that the SEC has allowed by brokers."

As he has said in past public appearances, Mr. Piwowar wants the SEC to address advice policy without being influenced by provisions in the Dodd-Frank financial reform law that authorize the SEC to promulgate a uniform fiduciary standard for retail investment advice.

"What I'm trying to do is have discussions taking a step back and put some options on the table in terms of what I think are possible paths forward," Mr. Piwowar said.

He did not elaborate after his appearance at the forum, as he walked quickly out the door to avoid an extended discussion with reporters.

"Stay tuned," Mr. Piwowar said. "The new chairman is going to have to set the agenda."

Mr. Piwowar did reiterate that he is interested in exploring "the use of names, like 'investment adviser.'"

In remarks before an Investment Adviser Association conference in March, he suggested that the SEC should evaluate how advisers use various titles to describe themselves.

Ms. McBride agrees with Mr. Piwowar on that point.

"The title thing is completely out of control, and it misleads investors," said Ms. McBride, founder of FiduciaryPath, a consulting firm. "Title reform could be great, if they do it right."

The other approach that Mr. Piwowar, Mr. Clayton and Kara Stein, a Democratic commissioner, could consider is "enforcing the '40 Act," Ms. McBride said, referring to the 1940 Investment Adviser Act. Under that law, financial advisers must act as fiduciaries if they're providing advice rather than just selling an investment product.

"It's very simple," Ms. McBride said.

The SEC is currently operating with just two of its normal team of five members, Mr. Piwowar and Ms. Stein.

0
Comments

What do you think?

View comments

Recommended for you

Upcoming Event

May 30

Conference

Adviser Compensation & Staffing Workshop

The InvestmentNews Research team will present exclusive data and highlights from its bellwether benchmarking study that will identify best practices for setting and structuring compensation and benefits packages throughout your... Learn more

Featured video

INTV

Cameras roll at Best Places to Work for Financial Advisers' awards

Advisory firm winners on the top 50 InvestmentNews list of Best Places to Work for Financial Advisers explain the significance of this recognition at the Chicago awards event.

Latest news & opinion

Focus Financial files for an IPO valued at $100 million

The RIA aggregator, founded by CEO Ruediger 'Rudy' Adolf (above), has partnered with more than 50 registered investment adviser firms.

RIA in a Box acquired by private equity firm Aquiline Capital

New owners plan more growth for the software service provider.

IBDs with the most female reps

Here are the 10 independent-broker dealers that have the most female reps.

Supreme Court decision likely to prevent brokers from filing class-action lawsuits

However, it likely won't bar employees from filing 401(k) lawsuits against their employers.

5th Circuit denies states' second attempt to defend DOL fiduciary rule

The three-judge panel split again, 2-1, in deciding not to take another look at the motion to intervene by California, New York and Oregon.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print