Standard of Care Harmonization, Impact Assessment for SEC

An October 2010 SIFMA and Oliver Wyman study for the U.S. Securities and Exchange Commission (SEC) on the impact of the harmonization of a fiduciary standard of care.

The primary issue at stake in the SEC ‘standard of care’ study is how to better protect the investor while preserving choice of relationship, product access, and affordability of advisory services. The key insight from the survey is that broker-dealers play a critical role in the financial services industry that cannot be easily replicated with alternative services models. Wholesale adoption of the Investment Advisers Act of 1940 for all brokerage activity is likely to have a negative impact on consumers (particularly smaller investors) across each of the following dimensions: choice, product access, and affordability of advisory services.

Oliver Wyman collected data from a broad selection of retail brokerage firms to assess the impact of significant changes to the existing standard of care for broker-dealers and investment advisors.

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Excerpt 

Executive Summary

• Oliver Wyman collected data from a broad selection of retail brokerage firms to assess the impact of significant changes to the existing standard of care for broker-dealers and investment advisors
  • A total of 17 firms provided data
  • These institutions serve 38.2MM households and manage $6.8TN in client assets
  • The survey captures approximately 33% of households and 25% of retail financial assets in the US
• The primary issue at stake in the SEC ‘standard of care’ study is how to better protect the investor while preserving choice of relationship, product access, and affordability of advisory services
• The key insight from the survey is that broker-dealers play a critical role in the financial services industry that cannot be easily replicated with alternative services models
• Wholesale adoption of the Investment Advisers Act of 1940 for all brokerage activity is likely to have a negative impact on consumers (particularly smaller investors) across each of the following dimensions
  • Choice
  • Product access
  • Affordability of advisory services