RIAs are not flouting the fiduciary standard they must meet when providing investment advice on their website. According to a new investigation by the Institute for the Fiduciary Standard, out of 45 fee-only RIAs reviewed, 14 of them mention the term “fiduciary” on the homepage of their websites, while 11 of them don’t cite the term anywhere on their sites at all.
Knut Rostad, co-founder and president of the Institute for the Fiduciary Standard, believes the disappearance of the term on RIA websites is due to the Securities and Exchange Commission’s Regulation Best Interest, the standard for broker advice. He believes the difference between investment advisors, governed by the fiduciary standard, and brokers has become more difficult to see.
Rostad believes that the fiduciary standard is stronger than Reg BI, while SEC Chairman Jay Clayton sees Reg BI raising the standard to which brokers are held.
Speaking during an institute webinar, Rostad said, “Where this comes into play is the degree to which the SEC has succeeded in convincing investors that there’s not a dime’s worth of difference between brokers and advisers.” He sees evidence of this in the institute's review of RIA websites and the disappearance of the term “fiduciary.”
Whether or not the term "fiduciary" is truly fading from the advisor-client lexicon, there remain distinct differences between advisors and brokers.
