Congress Still Considering the Fiduciary Standard

Last week the Senate passed a financial reform bill that, while the most sweeping since the Depression, failed to include amendments that would have held all financial advisors to a fiduciary standard. Apparently, Senators Menendez and Akaka, who support the fiduciary standard, could not garner enough support for their amendment. So, they pulled it, rather than allow it to be defeated.

All is not lost. The Senate and the House are currently assembling a team of lawmakers who will gather to reconcile differences in the Senate and House versions of financial reform legislation. Conference members may still include language modeled after the House bill which includes a fiduciary standard.

The Senate bill still includes a provision that requires the Securities and Exchange Commission to study the differences between the fiduciary standard and the suitability standard and make appropriate recommendations to Congress.

We do not need a federally funded study of this issue. Consumers deserve to be served by those who act in their best interests. It’s really that simple.

The banking, securities, and insurance industries are opposed to the implementation of a fiduciary standard. They are concerned that such a standard could impair their ability to conduct business, including selling proprietary products and charging commissions. They will lobby for the study and hope nothing comes of it.

Let’s hope our legislators defend consumers and pass a financial reform bill that includes the fiduciary standard.