State-by-state fiduciary approach concerns industry

Author: John Crabb | Published: 25 Jan 2019

There are concerns that the growing trend of individual states within the US to introduce fiduciary standards in lieu of the Department of Labor's (DoL) near-defunct rule could lead to unnecessary confusion for investors. The Securities and Exchange Commission's (SEC) own best interest standard regulation is yet to be finalised, and although a priority for the commission it may be some time before it passes.

Last year New Jersey introduced its version of a fiduciary regulation, and similar measures have been advanced in Maryland, Connecticut and New York. More recently, on January 18, the state of Nevada issued proposals for its own set of rules that govern how investors are able to advise clients.

Given that a federal law stipulating similar fiduciary protections has been introduced and is awaiting congressional approval, the potential grey areas pertaining to state vs federal regulation are significant, and could prove problematic. With the government...