Galvin to propose fiduciary rule for Massachusetts brokers

Galvin to propose fiduciary rule for Massachusetts brokers
The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.
JUN 14, 2019

Massachusetts will propose a rule that would mandate brokers and investment advisers apply a fiduciary standard of care in interactions with clients, Secretary of the Commonwealth William Galvin announced Friday afternoon. The Massachusetts Securities Division is soliciting preliminary comments on a rule proposal. The comment period will remain open until 5 p.m. on Friday, July 26. Mr. Galvin said his agency is proposing a fiduciary standard of care in response to the Securities and Exchange Commission's Regulation Best Interest, the final iteration of which was issued June 5, which he believes didn't go far enough to rein in broker conduct. "We are proposing this standard, because the SEC has failed to provide investors with the protections they need against conflicts of interest in the financial industry, with its recent 'Regulation Best Interest' rule," Mr. Galvin said. The fiduciary obligation will apply to recommendations, advice and to the selection of account types, according to the announcement. Therefore, it will apply to individual retirement account rollovers, as well as recommendations to open accounts involving asset-based or transaction-based remuneration, it said. "My office has seen firsthand the serious financial harm that investors and savers have suffered as a result of conflicted financial advice," he said. "Investors must come first." Massachusetts joins New Jersey and Nevada, which are also pursuing fiduciary rules in their respective states. Maryland lawmakers have tabled a similar bill in their state for now. Some states have felt compelled to address broker and adviser conduct after a Department of Labor fiduciary regulation was killed in the Fifth Circuit Court of Appeals in March 2018. That rule, an Obama-era regulation that took partial effect in June 2017, would have raised investment advice standards in retirement accounts such as IRAs and 401(k)s. The brokerage industry had argued against the DOL rule partly because it said the SEC, as the federal securities regulator, should be the body to rewrite investment-advice rules. Mr. Galvin and investor advocates feel the SEC's investment-advice rule didn't go far enough, while the brokerage industry has said it raises the bar from the existing "suitability" standard.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave