It’s been nearly a month since President Obama made a strong push for fiduciary responsibility on Wall Street, explaining that biased financial advice robs everyday Americans of billions of dollars each year.
Since that time, politicians and financial advisors alike have weighed in on the issue. But on Tuesday, perhaps the most important voice in the debate offered her stance.
“We should implement a uniform fiduciary duty for broker-dealers and investment advisers,” confirmed Mary Jo White, Chairwoman of the Securities and Exchange Commission (SEC).
Speaking at a Securities Industry and Financial Markets Association meeting in Phoenix, Ms. White said that she favors one standard for all retail investment advice. “The standard,” she explained, “is to act in the best interest of the investor.”
The speech provided some clarity on the issue, which was a polarizing topic in the financial industry long before President Obama’s speech. In the weeks since the President re-started the dialogue, it became known that the SEC’s four commissioners were split on the issue—Commissioners Luis Aguilar and Kara Stein are in favor of fiduciary duty, while Commissioners Daniel Gallagher and Michael Piwowar are opposed.
As Chairwoman, Mary Jo White holds the tiebreaking vote, so to speak—and it’s a resounding ‘yes.’
“It confirms what [White] has indicated in private—that she thinks this is an important issue, and one the commission should take up,” said Barbara Roper, Director of Investor Protection at the Consumer Federation of America.
Meanwhile, the Department of Labor (DOL) continues to pursue a separate rule for brokers giving advice regarding retirement accounts. DOL Secretary Thomas Perez spoke last week, and was confident that his own agency will be able to strengthen standards within the next year.
“This is one of the most remarkably important things we can undertake in [the remainder of President Obama’s administration],” said Secretary Perez. “I know we can get this done. We will thread this needle.”
But it won’t happen overnight. The latest proposal from the DOL reached the Office of Management and Budget on February 25. From that point, the Office of Management and Budget has 90 days to sign off before the DOL releases the rule for public comment. Of course, at any point the opposition can bog down the process through various means, including filing for a stay (i.e. suspension) on the rule in federal court.
However, there’s no denying considerable progress has been made in the early days of 2015. A potential fiduciary rule now has the backing of the most important voice in Washington, D.C., and gained similarly strong backing from two crucial government agencies in the past week.