SEC should impose uniform fiduciary standard: NASAA

Despite the protests of life insurance agents and broker-dealers, the Securities and Exchange Commission should decide in favor of a uniform fiduciary standard for all investment professionals, according to the new head of the North American Securities Administrators Association Inc. “My NASAA colleagues and I believe that financial professionals who provide investment advice ought to be held to the fiduciary duty currently applicable to investment advisers under the Investment Advisers Act of 1940,” David Massey, deputy securities administrator for North Carolina’s Department of the Secretary of State and the new president of NASAA, said at a speech Tuesday during NASAA’s annual meeting in Baltimore. “When you think about the many concessions in the Dodd-Frank Act, arguments against this fiduciary standard ring hollow,” he added. “A lot of these arguments focus on costs, but the focus should be on what is best for investors. Any increase in compliance costs, which we believe would be minimal, will be greatly outweighed by the direct benefits to investors.” “Not surprisingly, the strongest opposition to the fiduciary-duty standard has come from life insurance agents,” Mr. Massey continued. “Expensive variable annuities, for example, would be a lot harder to sell if agents were required to disclose their commissions upfront. Broker-dealers who provide investment advice should be required to disclose similar conflicts of interest — for example, when they recommend a high-cost product that generates greater commissions for the salesman when a low-cost product would serve the investor just as well.”