While attending the Schwab IMPACT conference in mid-November, a comment from retirement industry expert Brian Graff about how Dodd-Frank says the Securities and Exchange Commission must write its fiduciary rule for brokers—if the agency chooses to do so—caught my attention.
Graff, a Capitol Hill veteran who’s the executive director of the American Society of Pension Professionals and Actuaries, said to advisors in attendance that if the agency follows Dodd-Frank’s directive it may end up creating “two kinds” of fiduciaries.
As to Dodd-Frank precluding monitoring of investments under a fiduciary standard, Thompson said that “as a blanket statement, this is a red herring.” Brokers—and investment advisors—“have never been required to monitor client accounts unless it is in the service agreement.”
Thompson went on to say that Dodd-Frank clarified, “and in reality only confirmed, the traditional practice of brokers to ‘switch hats’ from fiduciary status so that they may execute transactions wearing their broker hat after giving personalized investment advice wearing their RIA hat,” which has always been the case, “as long as the dually registered broker/advisor discloses the change in status.”
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