Last year, the Department of Labor rolled back implementation of regulations that would have set high standards of fiduciary care, rules heartily supported by NWCM and firms like ours.  Given our disappointment in the rollback, we hoped the SEC would install a new fiduciary standard that would require all financial practitioners to adhere to the same fiduciary oversight we practice.

This past week, the SEC passed Final Rules Governing Investment Advice. Again, we at NWCM were disappointed—a sentiment shared by one of the SEC’s own commissioners who voted against the new Rules. Commissioner Robert Jackson wrote when casting his vote, “Today, the agency charged with protecting American savers has failed to force Wall Street to put investors first.” (Click here to read his dissenting opinion.)

Commissioner Jackson bemoaned the fact the Final Rule has “lowered the bar even more from the standards [the SEC] set in last year’s proposal.”

Jackson further writes “…today’s rules retain a muddled standard that exposes millions of Americans to the costs of conflicted advice.”

What we found incredulous was that the SEC concluded that even SEC-registered investment advisors like NWCM “are not required to put investors interest first.” This high standard has been the object of almost every SEC enforcement action. Jackson writes, “The guidance suggests that a careful reading of decades-old cases reveals that [the SEC was] wrong last year to say that this is the law.”

The SEC claims it lacks the data to identify which “advisers currently understand their fiduciary duty to require something different” than the standard the SEC just issued as Rule. Let us emphatically state, NWCM, along with thousands of advisers who take pride in being fiduciaries, absolutely understands our fiduciary obligations: An investor’s interest always comes first!

Commissioner Jackson asked proponents of a more demanding fiduciary standard to, “Encourage investors to seek out true fiduciary advice from financial professionals who have chosen to hold themselves to higher standards than those we’ve set today.” The footnote to this comment includes as its only reference the Code of Ethics, Rules of Conduct, Practice Standards and Disciplinary Rules of the CFP Board for CFP Professionals.

Three of us at NWCM have earned the CFP designation, and NWCM fully subscribes to its Code of Ethics, Rules of Conduct and Practices Standards.  On October 1, more rigid standards of ethical conduct go into effect for CFP Professionals.  A forthcoming letter from NWCM will discuss those standards and how they are different from and, in our opinion, superior to the SEC’s fiduciary standards of the Final Rules Governing Investment Advice.


The NWCM Fiduciary Team