SIFMA on Monday released a study conducted by management consulting firm Oliver Wyman that suggests that if a fiduciary standard is applied to all brokerage services, investors will lose out, especially less wealth investors with fewer than $250,000 in assets. The report was delivered to the SEC. It's a bit of an about face for the broker/dealer trade group, which had supported a universal fiduciary standard in the past, as long as that standard was friendly to different business models.
Consumer protection and investment adviser groups pounced on the study, calling into question the validity of its findings, considering SIFMA declined to release underlying data and only surveyed 17 firms in an industry where there are hundreds. The Consumer Federation of America sent a strongly worded letter to the SEC on the subject of SIFMA's study, saying that it falsely assumes that brokers would be forced to move to a fee-based compensation structure, falsely implies that investors would lose access to municipal and corporate bonds (and that capital formation for corporations and low-cost financing for municipalities could suffer as a result) if brokers were held to a fiduciary duty and presents unsupported and highly questionable cost figures.
Under Dodd-Frank, the SEC is required to conduct a 6-month study of the differing regulatory frameworks that apply to registered investment advisers and broker/dealers, and the impact of requiring that all investment professionals who provide ongoing investment advice adhere to a fiduciary standard.
More on this to come next week...