Staff of the U.S. Securities and Exchange Commission are recommending the adoption of a uniform fiduciary standard for broker-dealers and investment advisors.

Released late Friday, the study calls for a fiduciary standard for brokers that is as stringent as the standard currently applied to investment advisors.

In the study, SEC staff note that investment advisors and broker-dealers are regulated extensively under different regulatory regimes, but that many retail investors do not understand the distinction, and are confused by the roles played by investment advisors and brokers, and the differing standards of care.

The study concludes that “retail investors should not have to parse through legal distinctions to determine” the type of advice they are entitled to receive. “Instead, retail customers should be protected uniformly when receiving personalized investment advice about securities regardless of whether they choose to work with an investment advisor or a broker-dealer,” it says.

At the same time, the study notes that retail investors should “continue to have access to the various fee structures, account options, and types of advice that investment advisors and broker-dealers provide.”

As a result, the study “recommends that the commission . . . adopt and implement, with appropriate guidance, the uniform fiduciary standard of conduct for broker-dealers and investment advisors when providing personalized investment advice about securities to retail customers.” It also recommends that when brokers and investment advisors are performing the same function, the commission should consider whether to harmonize the regulatory protections applicable to such functions.

It remains to be seen whether these recommendations lead to adoption of a new fiduciary standard, in the face of lobbying against the initiative. Two SEC commissioners have already voice their opposition.

IE