Most brokers and investment advisors believe that extending the fiduciary standard to brokers would help regain investors' confidence. They also believe that SEC Chairman Mary L. Schapiro supports extending the fiduciary standard to brokers who provide advice to investors, according to findings in the new "fi360-AdvisorOne Fiduciary Survey." The vast majority of brokers and advisors, 81.4%, also say that "disclosures alone," are not "sufficient to manage conflicts."
These are the details of eight interesting, and often surprising, findings on the eve of the SEC report to Congress on its Fiduciary Study, which was mandated under the Dodd-Frank Act.
1. Extending the Fiduciary Standard to Brokers
Of 684 brokers and investment advisors who participated in the survey, which ran from Nov. 23 to Dec. 31, more than two-thirds, 67.3%, say a "uniform fiduciary standard for brokers and advisors would help regain investors' confidence."
More surprising was the make-up of the affirmative responses: Of the respondents who answered "yes" to this question, it was a nearly even split between brokers (fee/commission and commission only), 49.8%, and investment advisors (fee only and fee-based), 50.2%.
2. Does SEC Chairman Schapiro Support Extending the Fiduciary Standard to Brokers?
Almost two-thirds of survey participants, 62.3%, say the SEC Chairman "supports extending the Fiduciary Standard, as in the Investment Advisers Act of 1940, to brokers who provide advice."
3. Are Disclosures Sufficient to Manage Conflicts?
Of the overall 81.4% who answered that "disclosures alone are not sufficient to manage conflicts, " the broker-investment advisor split was also notable, with slightly more brokers (51%) than investment advisors (49%) saying disclosures alone are not enough to manage conflicts. But for the overall minority of 18.6% who answered that disclosures would be sufficient to manage conflicts, 74.4% are brokers, and 25.6% are investment advisors.
4. Do Investors Understand the Differences Between Brokers and Investment Advisors?
An overwhelming number of participants, 95.7%, say investors do not "understand the differences between brokers and investment advisors."
Effects of Extending Fiduciary Duty to Brokers
