Whatever the final SEC regulations are, it’s pretty well agreed that brokers will be operating under a more stringent fiduciary standard of care.
Given that, there will follow a dramatic transition for brokers and firms who will have to jump on the band wagon and add new technology if they want to continue to prosper.
The key word to the changes appears to be “advice.” Financial Research Corp.’s Chairman Bob Hedges said in a recent report “Rather than advice being incidental to trade execution, trade execution will be incidental to advice.”
This shift and anticipated new requirements calling for advisors, brokers and their firms to record and store all communication with their clients means firms will have to implement the tools needed to gather and store client data. Looks like their IT spending will skyrocket, along with some modification of their organizational processes and product development.
I’m certain will see some resistance and hear some “grumblings” within the industry.