Archive for June, 2017

Nevada Imposes its Own Fiduciary Duty on Broker-Dealers and Advisers

Thursday, June 22nd, 2017

The State of Nevada has imposed, effective July 1, 2017, its own fiduciary duty on investment advisers and broker-dealers (the “Law”).  Nevada’s Law is novel because: (i) it is the first time that a state has imposed a fiduciary duty on broker-dealers and their representatives and (ii) because it does not contain an exemption for SEC registered investment advisers, broker-dealers, and their representatives.

It is clear that investors are confused by the duties owed by investment firms, be they broker-dealers, investment advisers, or insurance producers.  The DOL fiduciary rule further clouded the differences since the same individual (broker) may have a different duty to the client depending on whether an account is a retirement account or not.  Dodd-Frank gave the SEC the ability to impose a fiduciary duty on brokers and the Commission has discussed doing so (or not) for years.  We expect that other states will follow Nevada’s lead and engage in state activism until the SEC makes a determination to pursue a fiduciary duty for brokers, or has at least affirmatively declines to pursue such a rule.

Members of MarketCounsel’s compliance management programs can find more information on the Law, including the enforceability and requirements of the Law, on RIAglass.

Focus on Fiduciary Standard Puts Adviser Negligence in Spotlight. @HDelux talks with @FinancialTimes.

Thursday, June 22nd, 2017

Negligence claims are a risk for financial advisers of all stripes. “The first step is to be completely aware of all conflicts of interests — and if you can’t avoid or minimize them, you must disclose all of them,” says Brian Hamburger, president and CEO of MarketCounsel, a business and regulatory consulting firm for investment advisers. He warns that disclosure alone does not satisfy the requirement that an adviser has acted in the client’s best interest. Investors need to be engaged in the process and have a full understanding of all products and decision-making.

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As DOL Fiduciary Rule Takes Effect, the Focus is on Compliance. @DanBernstein talks with @GregIacurci (@newsfromIN).

Monday, June 12th, 2017

“I think you’ll find different reactions over the next two to three months by firms,” said Daniel Bernstein, chief regulatory counsel at compliance consulting firm MarketCounsel. Some who are “pretty much at the finish line” already will continue on their trajectory, while “some will put their head in sand” until there’s clarity, Mr. Bernstein added. While the DOL has indicated it will not enforce the fiduciary rule in the interim as long as companies are “working diligently and in good faith to comply,” Mr. Bernstein said firms shouldn’t read this as a signal they can sit on their hands. “What may work today may not be deemed diligent and in good faith four months from now,” he said. MarketCounsel is an Englewood, N.J.-based firm that specializes in helping brokers transition to independence.

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The Fiduciary Rule Goes Live at Long Last. @BarronsOnline features @HDelux as contrarian.

Tuesday, June 6th, 2017

There will be holdouts. “By and large, absent a government mandate, you’ll find firms holding strong and trying not to deliver advice under a fiduciary standard,” predicts Brian Hamburger, president and CEO of MarketCounsel, a business and regulatory consulting firm for investment advisors. He believes most firms will stick to the status quo unless forced to change, because the old ways are more profitable.

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What to make of Goldman Sachs losing talent? Marc Cohen (@mcohen429) talks with @RIABiz

Tuesday, June 6th, 2017

While I’m unable to comment on any specific transaction, we have seen a significant uptick in activity out of Goldman Sachs and other private banks over recent months, which has led to a massive flow of assets to independence,” he says. “Of course, these transitions also carry with them increased risk for the transitioning advisors as they are generally conducted without the protections of the Broker Protocol.”  MarketCounsel is an Englewood, N.J.-based firm that specializes in helping brokers transition to independence.

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