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Rekenthaler Report

Should There Be a Single Fiduciary Standard for Financial Advisors?

The answer seems to be yes.

Keeping It Simple
Last weekend, The Wall Street Journal's Jason Zweig discussed Washington's ongoing debate about fiduciary responsibility. Those who give financial advice follow a dual regulatory standard. If they are Registered Investment Advisors, they are overseen by the SEC and are treated as fiduciaries who must act solely for the benefit of their clients. In contrast, if they work with a broker-dealer and report into FINRA, they face the lower hurdle of suitability--meaning that they are permitted to make self-serving recommendations, as long as the recommendations also suit the client's need. Many onlookers argue that all advisors should meet the stricter standards.

Knut Rostad, a registered investment advisor who runs an organization called The Institute for the Fiduciary Standard, puts the matter this way: "That an industry's central argument against modernizing regulations is that it can no longer do what's right for the client should be considered, at the very least, an odd admission of a gigantic failure. A gigantic failure when, at the very same time, registered investment advisors (RIAs) ARE apparently doing what's right for the client, or at least not waging a campaign based on their inability to do so."