Coalition Asks RIAs to Tell SEC How They Differ From Brokers

In Rostad's opinion, relationships with brokers involve three entities — "the company that is manufacturing and/or selling the investment or insurance products, the customer purchasing the products, and the broker in the middle who earns a commission for products sold," he said. "On the other hand, in an advisor relationship, there are just two entities: the client and the advisor. The advisor and the broker treat retail investors in entirely different ways."

Fiduciary advisor groups joining the institute in this effort include:

• National Association of Personal Financial Advisors (NAPFA)
• Garrett Planning Network
• XY Planning Network
• Alliance of Comprehensive Planners (ACP) and
• The Committee for the Fiduciary Standard

"NAPFA members have a long-standing tradition of providing advice under a fiduciary standard of care to all clients, at all times," said Geoffrey Brown, CEO of NAPFA, which represents fee-only financial professionals, in a statement. "To suggest, as [Regulation Best Interest or] Reg BI does, that fiduciary duties should only apply at the very moment a recommendation is uttered would be confusing. It would be wrong."

Michael Kitces, CFP and co-founder of XY Planning Network, says the group of fee-only advisors (who charge clients on a monthly subscription basis) believes investors should "have a choice between a salesperson who provides only incidental advice and a financial planner who provides real financial advice."

Fiduciary advisors wishing to comment on Reg BI can email comments to [email protected] and reference S7-08-18 in the subject line.

— Check out SEC Advice Proposals Take Center Stage on ThinkAdvisor.