ADISA’s Immediate-Past President, John Grady of DLA Piper LLP, provided comments on New Jersey’s Pre-proposed Amendment 2018-004, known as the Fiduciary Rule, at a hearing conducted by the New Jersey Division of Consumer Affairs and its Bureau of Securities on November 19, 2018, in Newark, New Jersey.

Speaking on behalf of ADISA, Mr. Grady elaborated on the following points:

1. The imposition of a fiduciary standard on financial advisory firms operating in New Jersey will create significant burdens on those firms that employ a transaction-based or “commission” approach. Such a standard will limit New Jersey residents’ access to quality advice, especially among small balance savers.
2. Having access to investment advice is tied to higher rates of saving and more diversified investment strategies and client portfolios. Imposing a fiduciary standard on financial advisers will cause investors, especially low or smaller balance savers, to have fewer options for accessing access high quality investment advice. Many such savers need access to “alternative” (non-correlating), investments to adequately diversify their portfolios against volatility; such products are difficult to access without a financial adviser.
3. The SEC is working on a single standard for broker-dealers that, if adopted, will provide consistent standards and nationwide investor protections, as opposed to a state-by-state approach.

ADISA submitted a letter (drafted by John Grady and ADISA Executive Director John Harrison), to New Jersey’s Division of Consumer Affairs regarding this issue. ADISA believes in appropriate regulation for all of its members and their various activities, including its members in New Jersey. The overriding goal is to ensure that the cost imposed by a regulation is matched or exceeded by the benefit produced thereby. ADISA believes that New Jersey and other states would be wise to see the SEC’s Regulation Best Interest (RBI) in action before placing additional regulatory burdens which seek to serve roughly the same purpose.

You can read the letter in its entirety here.