Security Industry Trends: Fintech Updates


Written by Finalis

Last edited on Sep 11, 2023

2 min read

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New federal regulations mandate that all financial advisors place clients’ interests first when providing any and all investment advice.

Furthermore, advisors must disclose conflicts of interest as broker-dealers will be mitigating circumstances to ensure eliminating cases deemed unethical. Although there are different ethical standards that apply to each financial advisor depending on industry and business models.

According to Jim Lundy, an expert in securities law and partner at Drinker Biddle, “Broker-dealers and registered investment advisory firms historically have not had a uniform standard of conduct, and that has not changed.”

SEC-registered investment advisory firms and their brokerages must adhere to the “fiduciary standard” as now insisted by the SEC and FINRA a declaration more commonly considered as the Regulation Best Interest. The Certified Financial Planner Board, or CFP, will also adhere to new ethics codes and require all CFPs to adhere to the fiduciary standards at all times.

The Labor Department has also jumped into the mix, building momentum around a revised fiduciary rule requiring 401k plans or similar workplace options to meet the standard. Despite the change, critics warn that the new rules fall short because it doesn’t do enough to limit the impact of conflicts of interest — such as commission-based pay or other financial arrangements — that end up costing investors and lining the pockets of brokers.

“The SEC is saying, ‘We’ll let you have the conflict and then just mitigate it,’” said Barbara Roper, director of investor protection for the Consumer Federation of America. While Ira Hammerman, Executive Vice President of SIFMA, mentions, “These greater standards, combined with training, compliance and documentation efforts … will lead to more professional interactions with clients,” Hammerman said. “That’s a positive development for everyone.”

With a constantly changing environment, coupled with consistent developments in financial law, the team with compliance experts who are up-to-date, seasoned, and experienced so your firm won’t have to do it all alone.

At Finalis, we know what it takes to serve our clients right. With a team of industry experts and professionals in compliance, banking, and law, we are made to stay resilient in times of uncertainty and legal change so our clients won’t ever have to.

Get in touch with our team to learn more.

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