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  • by Skip Schweiss
  • President, TD Ameritrade Trust Company
    Managing Director of Advisor Advocacy & Industry Affairs

A New Approach to Elevating Broker Standards

Though RIAs and their advocates have for years pounded the table urging regulators to enact a uniform fiduciary standard for both brokers and investment advisors, industry thought leaders at a recent TD Ameritrade Institutional forum considered a new message: Be careful what you wish for.

Recently, we convened our fourth Advocacy Leadership Summit in Washington, with dozens of industry thought leaders engaged in a roll-up-your-sleeves discussion about the best way forward on regulations. We were fortunate to hear from Rick Fleming, the head of the SEC’s Office of the Investor Advocate, who expressed some concern that any harmonization of standards between brokers and advisors would lead to lower, watered-down RIA standards.

That’s not good for investors

Lately, there is a growing consensus that separate but higher standards for brokers could help achieve the goals fiduciary standard advocates seek in the name of enhanced investor protections while leaving the higher ‘40 Act standards in place for registered investment advisers. Though not as stringent as the standards followed by registered investment advisors under the ‘40 Act, new rules of conduct proposed by SIFMA, the CFP Board and state securities regulators would require brokers to apply a higher, client-first approach.

Among RIA advocates in the room, the consensus is that we protect the ’40 Act, which has served investors well for 77 years. There was less enthusiasm for the SEC to raise a separate standard of care for brokers. “Best interest” is easily understood – more so than “fiduciary” – and seems synonymous with “fiduciary,” but may further confuse investors into thinking brokers and RIAs offer the same level of service.

On a related front, Mr. Fleming was optimistic that the SEC may soon address the issue of the many different professional titles used by brokers – namely, “financial advisor” — that can be confusing to investors. We at TD Ameritrade Institutional favor the SEC requiring greater clarity to investors as to whom they are getting services from, and how they are compensated and regulated.

Doubling down on advocacy

Earlier this year TD Ameritrade Institutional President Tom Nally announced that we were “doubling down on advisor advocacy,” because supporting the RIA profession isn’t just about legislative and regulatory developments: we need to ensure the RIA industry has the talent and client base to sustain its success for years to come.

Tom asked Kate Healy, TD Ameritrade Institutional’s head of marketing, to assume a new role as Managing Director, Generation Next, responsible for programs designed to help make the RIA industry more sustainable and more diverse by attracting more young advisors and women. Kate, a tireless champion for women and nextgen advisors for years, is ideally suited to devote her skills and energy in this direction.

Likewise, our Summit was expanded to include discussion on Next Generation and diversity issues. We recognize that we face an acute talent shortage as Baby Boomer-aged advisors reach retirement age at a faster clip than the industry can recruit the next generation. If we don’t address that challenge immediately, including ways that allow the profession to better reflect the changing face of our nation’s population, the RIA industry won’t be able to sustain itself.

Kate told Summit attendees that RIA firms will be challenged to find and recruit the next generation of advisors, whether from universities or other professions. She also urges RIAs to take steps to source and hire young talent. RIAs devote their energy to making sure clients have a plan for their financial future; it’s time they devote the same energy to ensuring the future of their profession.

Don’t give up the fight

To recognize those individuals who have made a difference in the profession, this year we created the TD Ameritrade Advocacy Leadership Award.

Our inaugural winner is Harold Evensky of Evenksy & Katz / Foldes Financial, a successful investment advisor and financial planner, a mentor to next generation planners and a long-time advocate for the fiduciary standard. Over the years, I’ve leaned on Harold for clear, bottom-line thinking on complex issues. He’s truly deserving of this recognition and someone who can inspire others to champion RIAs.

We were also fortunate to be joined by Phyllis Borzi, the recently-retired Assistant Secretary of Labor best known as the driving force behind the DOL’s new Fiduciary Rule.

Secretary Borzi noted the rule’s goal is to better protect retirement investors especially when they roll retirement savings out of ERISA-protected 401(k) plans. This is a mission that helped keep her motivated during the many years the DOL rule was formulated and enacted. She emphasized that the DOL rule is now in effect, though the Trump administration has ordered DOL officials to reassess some provisions.

She expressed confidence the rule will survive these challenges. Phyllis told the story of her father, a World War II veteran who taught her that in combat, you must fight for every hill, but that in life, you choose the hill you fight for. Phyllis says her father’s lesson motivated her to keep fighting for the fiduciary rule.

Whether you approve of the DOL rule or not, as advocates we can all agree that it’s important to choose our own “hill,” gird ourselves for battle and step up the fight.


Third parties mentioned above are separate from and not affiliated with TD Ameritrade, which is not responsible for their services or policies.


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