After thinking more about the two reregulation bills working their way through Congress, it occurs to me that there is a faint silver lining on the horizon. How faint depends on who you talk to.
The Dodd bill in the Senate addresses the issue of a fiduciary duty for all financial advisors by eliminating the broker exemptions to the Investment Advisers Act of 1940. I'm sure you're all aware that's the part of the Act which says if you give investment advice incidental to the sale of securities, you don't fall under the requirements of an RIA, including that pesky duty to put the interests of your clients first. By simply plugging that loophole, the Dodd version of the Investor Protection Act would mean that anyone who offers investment advice would need to register as an investment advisor and become subject to all the restrictions and duties thereof.
This approach to advisor regulation finds a warm spot in my heart, both for its simplicity and for its far-reaching implications. Instead of reopening the can of worms about what a "fiduciary duty" really means, it simply subjects all advisors to the already existing fiduciary duty that is well established for current RIAs. And we don't really need to bicker much about when the fiduciary would apply: If you give advice, you are a fiduciary.
