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States Could Ease Up on FA Regulation If Biden Wins: FSI CEO

By Mrinalini Krishna October 26, 2020

The result of the November presidential election may impact the way states approach their regulation of financial advisors, especially when it comes to fiduciary rules, industry executives said last week.

States could ease up on their regulation of advisors if Democratic Party contender Joe Biden wins the election, according to Dale Brown, president and CEO of Financial Services Institute.

“If the president is reelected, I think you’re going to see many more states put the accelerator down because they don’t like what the SEC has done,” Brown said last week at Cetera Financial’s Connect@Home conference.

“And if [former] vice president Biden wins the election and, in particular, if the Democrats solidify their gains in the Senate, I think we could see a significantly more aggressive regulatory approach in Washington, and therefore states might start to back down,” he added.

Mark Quinn, Cetera’s head of regulatory affairs, agreed.

“[A] lot of what happens in the states in the next couple of years may very well be a function of what happens with the presidential election in 2020,” he said.

Quinn noted that states embarked on their own fiduciary rulemaking because they didn’t think the SEC’s Regulation Best Interest went far enough to protect investors. Massachusetts unveiled a state-level fiduciary rule earlier this year. New York, New Jersey and Nevada are working on similar initiatives, as reported.

The states’ own fiduciary rule initiatives have met with opposition from the industry, with criticisms including the compliance challenge of having different rules across states.

At the conference, FSI’s Brown said the states’ fiduciary rules may cause more harm than good.

“While those are noble policy objectives, even if politically motivated, the unintended consequence will end up being that Main Street investors will lose access to advice because it will make the business significantly more costly and complex,” he said.

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Tags:  Regulatory/legal issues , Cetera Financial , Cetera , Financial Services Institute

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