President Obama’s Financial
Reform Bill could require financial advisers, including wealth
managers, to have a fiduciary duty to all clients for all financial
instruments.
The Financial Reform Bill, which was signed
into law yesterday by President Obama, launches a wide range of
initiatives including an independent consumer-protection bureau
around financial products and a restriction on banks making
“proprietary” investments that do not benefit clients, including in
hedge funds and private equity funds.
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Private banking observers interviewed by
PBI in the July edition said the 2,300-page law
contained hundreds of seismic shifts to the financial regulatory
landscape.
‘Game changer’
Todd Millay, managing director of the Wealth
Management Group at Choate Investment Advisors, said the degree to
which there was a fiduciary duty was “a game changer” for wealth
managers.
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By GlobalData“I’d expect to see one of the things that
could come out of this is a higher standard of duty,” said Millay,
whose unit is responsible for nearly $3bn in assets for high net
worth individuals and families.
“If the duty is heightened and the adviser is
less of a salesman and more of a true wealth manager, that will
usher in a wave of related regulatory changes aimed at greater
disclosure and the elimination of real and perceived conflicts of
interest,” he said.
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