$1B cost to harmonize adviser-broker rules would land on clients, Schwab's Bernie Clark says
Melding 600-800 B-D regs and 40-60 adviser regs would be costly, without any real benefit to clients
By Liz Skinner
Nov 12, 2013 @ 10:40 am (Updated 3:21 pm) EST
Harmonizing regulations that pertain to investment advisers and brokers would add $1 billion in expenses to registered investment advisers without any real benefit to clients, who ultimately would pay that price, Bernie Clark, head of Schwab Advisor Services, said at the Schwab Impact Conference in Washington D.C. on Monday.
The estimate includes one-time costs the firms would incur should the 600 to 800 broker-dealer rules be melded with the 40 to 60 rules that pertain to RIAs, Mr. Clark said in an interview.
He said aligning these regulations is increasingly becoming part of the discussion about whether to require brokers to meet the investment adviser fiduciary standard, which requires advisers to act always in the best interests of the client. Brokers today have to meet only a suitability of investments standard.
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"Having a single standard of care that puts the client interests first sounds interesting and we would probably support it," Mr. Clark said. "The problem comes when you begin to link other things with that — like rule harmonization."
The Securities and Exchange Commission is considering the costs and benefits of requiring brokers to put the best interests of clients first.
The Charles Schwab Corp. is encouraging its 7,000 financial advisers to send letters to their lawmakers in Washington with a warning that any federal proposal melding broker-dealer and investment adviser rules would increase their costs of compliance and operations.
Liz Skinner covers practice management for InvestmentNews and wants to hear any tips or innovative approaches that have helped advisers improve their businesses.
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