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Commissioner Piwowar Discusses Uniform Fiduciary Duty, Useful Disclosure

In a recent speech, SEC Commissioner Michael Piwowar questioned the utility of requiring a uniform fiduciary duty for broker-dealers and investment advisers. Piwowar worried that, similar to what has occurred in the United Kingdon, the costs of such a rule would take retirement planning services out of reach for many. Piwowar stated that he had not yet come to a conclusion on the issue, but that “the potential benefit[] seems elusive and the potential costs sky-high.” He also urged the agency to resist pressure to either precede or immediately follow the Department of Labor’s re-proposal of its definition of “fiduciary,” stressing the SEC’s role as an independent agency that should only act after it fully understands “the nature of the issue at hand, the cause giving rise to the issue, and the possible costs and benefits of all potential solutions.”

Piwowar cited the current disclosure regime as one potential cause of investor confusion regarding the different standards of care, questioning whether changing disclosure rather than adopting a uniform standard could address the issue. As an example, he relayed his recent experience in changing brokerage firms, noting that “[h]ere I am, an SEC Commissioner and financial economist, and the required disclosures were essentially worthless.” He urged the SEC to undertake a study of a “concise disclosure document” for broker-dealers and investment advisers to determine the format that would best communicate relevant information to investors.