Fiduciary Duties Need to Extend to Research Most of the coverage of the SEC’s recent proposal to replace the DOL Fiduciary Rule has focused on the different standards for brokers vs. advisors and the shortcomings of a disclosure-based approach to regulation. We agree with many of these criticisms, as we wrote last week before the proposal was released. However, the SEC’s proposal contains an even more fundamental flaw. Even if brokers were held to a fiduciary standard of conduct, the ambiguous interpretation of the fiduciary Duty of Care makes any regulation difficult to enforce and confusing for all parties. The SEC needs to offer a more

After lengthy delays and attempts to kill the regulation, the Department of Labor’s Fiduciary Rule went in to partial effect in June 2017. Now, the fifth circuit court has struck down to the rule, after concluding that the rule “overreached” and was “unreasonable.”  While the ruling could end the Fiduciary Rule as law, it cannot erase the awareness the DoL raised nor can it stop market forces leading the business towards a more ethical place. Fiduciary Rule as Law May Still Exist Despite the ruling, attorneys note that the Department of Labor has many ways to respond. First, it could

Uncertainty defined 2016. Analysts tried in vain to predict the Fed’s actions on interest rates. Changing commodity prices defied investor expectations. And of course, the presidential election provided ample drama for the markets. In the midst of all that uncertainty, investors grew more and more aware of the need for real diligence. The market is increasingly aware that the accounting constructs reported by companies (especially those non-GAAP results) don’t always represent the underlying economics of the business. In 2016: Big institutional investors began pushing companies to tie executive compensation to return on invested capital (ROIC) instead of GAAP EPS. The

We applaud the DOL for raising awareness of the importance of fiduciary standards. No matter the legalities, the new fiduciary rule is here to stay. Few would argue against the idea that all advisors should act in their clients’ best interests. Investors are better served, and the investing business has more integrity, when the fiduciary level of service is applied. Investors want advice that is aligned with their best interests. No advisor wants to be perceived as not having the clients’ best interests top of mind. However, many people throughout the industry are still unclear as to how the fiduciary