Title reform is catching on inside the SEC as a simple solution that would be straightforward to implement as the regulator moves toward a proposal for a new fiduciary standard, Investment News reported.

Title reform would draw a line between brokers and investment advisors (and advisers), limiting who can use the latter title to those who give personalized financial advice.

The SEC is planning to reveal a fiduciary rule this year to coordinate with the Labor Department’s rule that went into effect last year.

That rule, which has been partially delayed until June 2019 as the regulation is reassessed under a directive from President Donald Trump, places advisors and brokers into one advice standard and would require retirement account advisors to put clients’ interests first.

Advocates for title reform say it is a clean solution, requiring only that the SEC enforce the broker exception in the 1940 Investment Adviser Act, whereby a broker is not an investment adviser if their advice is “solely incidental” to a sales transaction, Investment News reported.

SEC commissioner Michael Piwowar supports title reform as part of the regulator’s fiduciary proposal, the report said.

“You shouldn’t be able to use the word ‘adviser’ or ‘advisor’—spelled with an ‘e’ or an ‘o’—unless you are subject to the investment adviser fiduciary standard,” he said at SEC Speaks, Investment News reported. “So, prohibit terms like ‘financial adviser’ or ‘wealth adviser’ unless you are an investment adviser.”

Others see the move as favouring one title over another.

“If you see the two terms side by side, the ultimate effect is to create a pecking order with a competitive advantage,” Gary Sanders, counsel and vice-president of government relations at the National Association of Insurance and Financial Advisors, told Investment News. “It’s not the regulators’ role to give a competitive advantage to one segment of players over another.”

Read the Investment News article here.

In Canada, CSA consultation paper 33-404 has asked for comment on prescribing titles for registered reps, such as “securities salesperson” for reps who work at firms with proprietary product lists. The Ontario government signalled in its 2017 budget that it intends to regulate titles for financial planners, and to examine the feasibility of a statutory best interest duty. New Brunswick is the only other province whose securities regulator is considering a best interest standard.

Read: IIROC guidance on managing conflicts poses challenges for dealers

Ontario ‘working closely with SROs on titles reform

Battle over CSA reforms reveals industry cracks

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