The Committee for the Fiduciary Standard has sent a second comment to the US DoL to modify fiduciary rules that it strongly believes will benefit US retirement investors.

The fiduciary debate rumbles on as the Committee for the Fiduciary Standard once again urges the Department of Labor to update regulations in a landmark move that would require anyone or firm providing investment advice to retirement investors to do so as a fiduciary.

The proposal, which sparked heated discussions in the financial services sector and political world, is part of an extremely intense debate over the key differences between the fiduciary obligations of broker-dealers and RIAs.

“The drumbeat of change toward the fiduciary standard has been going on for a long time,” the committee said in a statement.

“There is every reason to enact DoL's fiduciary update. Once enacted, investors who haven't been working with a fiduciary, yet, will be able to get genuine advice that's in their best interest - for the first time.”

The committee acknowledged that there are many financial professionals working in firms that are not currently fiduciary-bound, but do their best to put investors' interests first.

“But when they don't have the support of their firm, including fiduciary training, compliance and investment due diligence, that is almost impossible,” it said. “In addition, without the regulatory requirement to actually put the investor first, there is no way for an investor to know whether that advice is in their interest or the intermediary's interest.”

The committee highlighted that there are many RIAs who already provide fiduciary advice to investors across all levels of wealth, in retirement as well as non-retirement accounts.

The crux of the issue however is that many clients may consider the investment advice they receive from RIAs and broker-dealers as similar, when there is a crucial legal difference that might not be fully understood. (RIAs must adhere to a fiduciary standard under the Investment Advisors Act 1940 while brokers operate under a “suitability” rule. This means that while recommendations made by brokers must currently be suitable, they don't have to be in an investor's best interest.)

Those who oppose the potential implementation of a uniform fiduciary standard argue, among other points, that some brokers would either exit the industry, charge investors more for advice or simply stop working with “smaller” investors.

Click here for recent findings looking at some of factors at play in this contentious, ongoing debate.

The committee was set up in June 2009 by a group of investment professionals and fiduciary experts - as policymakers and industry leaders were reviewing the repercussions of the financial crisis - to advocate that all investment and financial advice be rendered as fiduciary advice and meet the requirements of the five core fiduciary principles. 

"Of course, guidance is welcome and necessary during a transition like this one. We hope [the] DoL will clarify and even streamline parts of the rule, but only if, when and in ways that would not dilute the proposed rule’s North Star of fiduciary duty," wrote Kathleen McBride, chair of The Committee for the Fiduciary Standard, in a two-page letter to the DoL this month.

"The effect of alternate proposals would be to weaken even the decades-old ERISA [The Employee Retirement Income Security Act] protections and widen or add new loopholes," the letter said.