We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • State Fiduciary Laws Seen Adding to Chaos, Confusion

    October 24, 2017 by Rita Raagas De Ramos

    Proponents and critics of the Department of Labor’s fiduciary rule finally agree on something: States coming up with their own fiduciary laws just add to the chaos and confusion.

    Nevada passed and signed into law its Senate Bill 383, subjecting broker-dealers and investment advisors – effective July 1 – to the Nevada Revised Statute for financial planners, NRS 628A. The law effectively imposes a statutory fiduciary duty on broker-dealers and investment advisors to act in the best interest of their clients and comply with disclosure requirements.

    Nevada’s secretary of state is in the process of considering and drafting regulations relating to this fiduciary duty. The office says the draft regulations will identify acts, practices, or courses of business that may be excluded as a violation of the fiduciary duty.

    During a rulemaking workshop conducted in Las Vegas earlier this month by the securities division of Nevada’s secretary of state, Lisa Bleier, Sifma associate general counsel and managing director for public policy and advocacy, voiced why the broker-dealer lobby group thinks a state-by-state approach to fiduciary rulemaking is a bad idea.

    She said the approach “would subject financial professionals and firms to a confusing and potentially contradictory array of requirements and further muddy the waters for consumers trying to determine their relationship with their broker.”

    Christopher Lewis, deputy general counsel at Edward Jones, said at a Practicing Law Institute conference last month the initiatives undertaken by Nevada and other states are among the “profound” changes triggered by the DOL’s fiduciary rule. Connecticut has also signed a bill to expand its fiduciary requirements on brokers while lawmakers in New York, New Jersey and Massachusetts have introduced similar measures.

    “State laws are encroaching in this area,” he said. “There is a sense that this [Donald Trump’s] administration will pull back on regulations, so we expect to see a lot more states move into the space.”

    The problem with having state fiduciary laws is they “are not going to be consistent,” Lewis said. “If state laws proliferate across the country, then we’re back to a place of having different standards to adapt to.”

    Barbara Roper, director of investor protection at the Consumer Federation of America, says state-by-state fiduciary laws could potentially create more loopholes that might disadvantage consumers.

    For example, she says the new Nevada law excludes insurance agents from the financial planner category.

    “Given that insurance agents act as financial planners or retirement planners, leaving them out of the new state law seems like a pretty significant shortcoming,” she says. “If they’re going to tackle this at the state level it should be done in such a way that it covers all financial planners or advisors.”

    Roper says it’s frustrating that lobbying against the DOL fiduciary rule caused a delay in its initial implementation, and that its full implementation remains subject to a review. That frustration has contributed greatly to the initiatives of various states to enact their own fiduciary laws to ensure the protection of the investors in their respective states, she claims.

    At a hearing last month by the House Subcommittee on Capital Markets, Securities and Investments, Rep. David Scott, D-Ga., said that he, like other legislators, place part of the blame for the delay in the full implementation of the DOL rule on the SEC. He said he and other legislators had been urging the SEC to come up with a uniform fiduciary standard. “Their failure to do so has put us in a difficult situation,” he said at the time.

    Bleier said Sifma is concerned that any new fiduciary duties under the new Nevada law would impose additional recordkeeping requirements that would violate the National Securities Markets Improvement Act of 1996. She said NSMIA precludes states from enacting regulations relating to the making and keeping of records “that differ from or are in addition to” the requirements in those areas established under the Securities Exchange Act of 1934.

    “We are hardpressed to envision a scenario in which new duties do not require the creation of a new record,” she said.

    Bleier said the new Nevada law’s disclosure and information collection requirements will need to be fulfilled in writing or verbally but followed by the creation of a written record to document compliance.

    Specifically, she said the new Nevada law requires broker-dealers and investment advisors to disclose to a client – at the time advice is given – any gain they may receive, such as profit or commission, if the advice is followed. She said it also requires broker-dealers and investment advisors to determine and update the client’s financial circumstances, as well as current and future obligations.

    Bleier said Sifma disagrees with the new Nevada law lumping “all broker-dealers, investment advisors and their sales representatives” in the same category as financial planners. She added that the new Nevada law should define the parameters of “advice” and “profit.”

    There are instances when the activities of broker-dealers, investment advisors and their sales representatives fall “outside the definition of financial planner and the intent of the new law,” she said. A person should not be considered a financial planner unless the person gives advice on the investment of money in exchange for compensation, she said.

    She tells FA-IQ that broker-dealers who are not necessarily providing their clients with advice will be forced to increase the fees they charge clients because of the costs associated with complying with new fiduciary standard rules, whether they be the DOL rule or state rules.

    She says examples of broker-dealer activities that don’t include giving advice are providing general research and strategy literature; discussing general investment and allocation strategies; seminar content not specific to a customer; general marketing and education materials not specific to a customer; financial planning tools and calculators that use customer information but do not recommend specific securities; providing web sites where retail customers use tools to analyze securities to make self-directed investment decisions; holding securities, including concentrated positions or other complex or risky investment strategies, at the customers’ request in a nondiscretionary account; and taking and executing unsolicited customer orders.

    In her testimony, Bleier raised one point that isn’t specifically addressed in the new Nevada law: the impact of the state law on arbitration agreements.

    She said Sifma wants Nevada’s secretary of state “to clarify that the new law has no effect on arbitration agreements.” She noted that the new state law permits parties to file new civil actions against broker-dealers and investment advisors.

    “We are concerned that the language, as it stands, could lead to confusion and increased filings in civil court,” she said, asking that the rules being drafted for the new state law “explicitly state” that it does not affect the rights of any party in relation to the arbitration of any dispute under the Federal Arbitration Act (FAA) or any agreed-to pre-dispute arbitration agreement.

    Jill Gross, a law professor at Pace University, said at the Practicing Law Institute conference last month that she believes “any state law that tries to outlaw in any shape or form mandatory arbitration in customer agreements will be preempted by the FAA.”

    Originally Posted at Financial Advisor IQ on October 19, 2017 by Rita Raagas De Ramos.

    Categories: Industry Articles
    currency