Research

White Papers

What Investors Can Learn About An Advisor’s Conflicts in Form ADV: ‘But Were Not Sure How to Ask’

by Knut A. Rostad and Darren M. Fogarty, Published on September 12, 2016

RIAs DNA of objective investment advice is embedded in the Advisers Act of 1940. What’s often over-looked, however, are differences among RIAs on measures in the Adviser’s Form ADV that serve as ‘fiduciary indicators’. The research identifies some of these indicators and explores some of these differences.

What is “Good Advice”?

by Knut A. Rostad, Published on May 23, 2016

Questions of good advice and financial planning are timely. 2016 will initiate the DOL COI Rule era, 76 years after the Advisers Act of 1940, and 47 years since the “birth” of financial planning. And timeless. The force behind the DOL rule reflects the “shared mission” and question that attracted the financial planning founders in 1969: Can advice replace sales as the industry “driving force”?

Fiduciary Duties Advanced in 2015; 2016 Will Reveal How Much These Gains Are Secured – Or Not

by Knut A. Rostad and Darren M. Fogarty, Published on January 28, 2016

Winning the fiduciary “Debate” in 2015 was vital… and insufficient. The future of advice depends on how Fiduciary Duties and “Best Interest” are defined by regulators and advisors. History, law, research and common sense suggest that a stringent definition is necessary.

Statement of Knut A. Rostad On “Best Interest” and SIFMA’s “Proposed Best Interest of the Customer Standard For Broker-Dealers”

by Knut A. Rostad, Published on June 9, 2015

The “Best Interest” standard is central to the regulation of advisers and brokers. It’s key to the DOL COI proposed rule and recent SEC statements and decisions. Now, a Securities Industry Financial and Markets Association (SIFMA) statement discusses conflicts of interest, disclosure and fee transparency. Despite its obvious importance, federal policy makers and regulators still have not affirmed or promulgated a view of the “Best Interest” standard as drawn from the Advisers Act and common law.

Conflicts of Interest and the Duty of Loyalty at the Securities & Exchange Commission

by Knut A. Rostad, Published on April 6, 2015

SEC Chair Mary Jo White’s recent statement that the SEC should proceed with rule-making on a uniform fiduciary standard focuses attention on what such a rule may entail. Recent SEC decisions, statements from senior staff and commissioners and statements from former SEC staff and commissioners provide bold lines of a clear picture of the SEC’s view of the duty of loyalty. These bold lines suggest traditional views that conflicts of interest are inherently harmful and should be avoided have altered. Instead they depict a new and benign view of conflicts. A view that holds that conflicts are routine and acceptable — not inherently inconsistent with providing objective advice.

Key Principles for Fiduciary Best Practices and an Emerging Profession

by Knut A. Rostad, Published on September 10, 2014

Fiduciary law is complex in its nuances and structures; fiduciary principles are not so complex. Instead they reflect the wisdom of Emerson, who noted, “Nothing is more simple than greatness; indeed, to be simple is to be great.” So it is with principles on which fiduciary best practices and an emerging advisory profession must rest. This paper notes the attributes of character, suggests relevant operating principles or premises for best practices based on these attributes, why these principles matter, and how they starkly differ from principles underlying common brokerage sales practices aggressively advocated by brokerage lobbyists. Throughout, the simplicity of these principles and their meaning to investors stand out.

Fiduciary Institute to Craft Fiduciary Best Practices that Investors Want

Published on May 13, 2014

The Institute for the Fiduciary Standard today announced the formation of
a Best Practices Board to craft fiduciary best practices for investment and financial advisors.

Six Core Fiduciary Duties for Financial Advisors

by Knut Rostad, Published on September 9, 2013

The Six Core Fiduciary Duties embody the major elements of fiduciary responsibility under the Advisers Act of 1940.

Fiduciary Reference – Analysis of Investment Fiduciary Issues

by Knut A. Rostad, Published on April 16, 2013

The SEC March 1 Release* assumptions about a possible uniform fiduciary standard and the duty of loyalty sharply restrict when fiduciary duties are applied. If these assumptions are adopted in rulemaking, fiduciary duties would effectively be removed for brokers and advisers giving investment advice to retail investors.

A Discussion of Some of the Differences Between the Regulatory Requirements of Brokers and RIAs

by Knut A. Rostad, Published on April 11, 2012

A discussion of the differences in the standards of investment advisers and brokers is essential amidst the calls for “harmonizing” the two. This paper seeks to highlight how these two standards differ in terms of the legal requirements and duties imposed on advisers and brokers.

On the Regulation of Investment Advisory Services: Where do we go from here?

by James J. Angel, Published on October 31, 2011

On July 14, 2011 SIFMA submitted comments to the SEC on a proposed framework for establishing a uniform fiduciary standard of conduct for broker-dealers. SIFMA’s proposal departs from the fiduciary standard as set forth under the Advisers Act of 1940 and, if adopted, would be particularly harmful to retail investors.

Institute Research Associate – Darren Fogarty

Darren Fogarty is an undergraduate at the University of North Carolina at Greensboro (UNCG), where he studies Economics and Sustainability Studies. He also recently graduated from a summer program studying International Relations at Georgetown University.

Darren also works at UNCG’s writing center as a consultant, where he aids students and alumni in their writing processes. He is passionate about the work he does for the Institute, and is dedicated to promoting and preserving the principles which uphold our capital markets.