Before he stepped down this week as chairman of the Securities Industry and Financial Markets Association, Chet Helck launched the organization's initiative to elevate customer care among its members to a best-interests standard.
The effort, designed to help the financial industry regain investor
trust following a loss of confidence since the financial crisis, is modeled on a similar program at
Raymond James Financial Inc., where he is the chief executive of the Global Private Client Group. He spoke to
InvestmentNews at the SIFMA annual conference in New York this week.
InvestmentNews: What is the essence of the SIFMA initiative?
Mr. Helck: It gets at the issue of having all firms at all levels — from the CEO down to the associates who serve clients — recognize that putting clients' interests first has to be our commitment. At Raymond James, we've done that. I know you can operate a firm that way. You'll have a lot fewer problems and you'll have a lot better business success. We've grown and prospered during a period of time when much of the industry has contracted.
IN: How do you respond to critics who say SIFMA could mislead investors into thinking that brokers are fiduciaries, when by law they aren't?
Mr. Helck: [Financial firms] don't have to do those things, but they can do those things, if they choose to. As a practical matter, virtually every retail financial adviser affiliated with a broker-dealer also operates as an [registered investment adviser]. They all have fee-based accounts. At Raymond James, nearly half our assets are in fee-based accounts, which operate under an RIA ADV and are subject to the [Investment Advisers Act of 1940] fiduciary standard.
IN: Then why not just subject all brokers to the fiduciary standard?
Mr. Helck: That's exactly what SIFMA is supporting. Where the world gets hung up is on the word
'fiduciary.' The reason it gets hung up is because when you get to court, there is a body of case history that courts use as precedent for interpretation going forward. For institutions under the '40 Act, there are prohibited transactions, such as principal trading. I'd be OK with calling it a fiduciary standard, if we could put a definition on it that creates its own going-forward kind of precedent. That's hard, by the way. That's why we haven't done it.
IN: Is the SIFMA initiative an attempt to get the Securities and Exchange Commission off your back?
Mr. Helck: That is not going to happen. The industry wants to demonstrate to the regulators that we're not fighting them. We're not trying to resist regulation. They just hired an enforcement attorney to run the [SEC]. It's clear what they're up to.
IN: Are you trying to stop the Department of Labor fiduciary-duty rule? Can you succeed?
Mr. Helck: We are. I don't know. It's very much up in the air. I wouldn't bet on [stopping] this one. They seem to be unresponsive to our request to reason through coordinating their rulemaking with the SEC. They're unwilling to even consider that.
