Advisors now want Finra as regulator
The debate about how to regulate investment advisors and traditional brokers has been simmering for at least two years now.
As of right now, it seems that the idea of having Finra, long accused of having a wirehouse-like regulatory mentality, regulate registered investment advisors may be gaining more support, according to DealBook. The idea was once anathema to advisors, many of whom would prefer the status quo or even a new SRO. But it looks increasingly like the SEC just doesn't have the resources to adequately police most advisors and like a new SRO would be prohibitively expensive and risky.
One prominent lobbying group, the Financial Services Institute, is now on board with the idea of Finra as advisors SRO, arguing that it is not ideal but that it is the most workable. Finra is the "devil we know," one proponent argues. The first order of business for any regulator will be to resolve the biggest issue facing the retail wealth management industry: Should regulators agree to a common standard governing interactions with clients? Should traditional Series 7 brokers be forced to adhere to more than the current suitability standard? Would a common fiduciary standard be in the best interests of all? How should such a standard be developed?
If the regulator, whoever it might be, can resolve this issue to the liking of all, it would generate a lot of credibility early. It would bode well for long-term success.
- here's the article