Over the last few years the battle over the fiduciary duty of financial advisors has been fought at the federal level, but now New Jersey, a state that is home to many financial firms, is opening a new front in the war. New Jersey’s governor wants to force financial firms registered in New Jersey to adopt a fiduciary standard.
I encourage all investors to find advisors held to a fiduciary standard, as it’s the only way to ensure an advisor has the clients’ best interests in mind. Other advisors held to the much lower ‘suitability standard’ could be more willing to fill their clients’ portfolios with securities they’re trying to get rid of, not ones that are best for the client.
Financial Planning Magazine’s Andrew Welsch reports on New Jersey’s effort:
New Jersey’s newly proposed fiduciary rule expands the battlefield over which investor advocates and industry trade groups have fought in recent years, extending a fight that has largely taken place in Washington to state capitols across the nation.
The Garden State, which issued its proposal on Monday, suggests that if efforts at the SEC to craft a new standard of conduct are deemed to fall short, then state regulators will move to fill in the gap.
It’s a message Governor Phil Murphy, a Democrat, echoed, touting his administration’s proposal as one “of the strongest investor protections in the nation.”
“At a time when the federal government is undermining the consumer protections implemented in the wake of the 2008 economic crash, we are committed to ensuring our residents and families are protected from predatory financial practices,” Murphy said in a statement.
New Jersey’s proposal would require investment professions registered with the state’s regulator to put client interests first when recommending securities or providing investment advice. The rule will be subject to a 60-day public comment period.
“I think it’s a clear message that the SEC has not gone far enough in terms of what it proposed,” says Christine Lazaro, director of the Securities Arbitration Clinic at St. John’s University and current president of PIABA.
I have regularly recommended to readers that they should seek a professional advisor held to a fiduciary standard to manage their investments. For more on the subject, read here:
