Charlotte, VT, September 14, 2010 --(PR.com
)-- In the investment world, registered investment advisers have fiduciary obligations to their clients while stockbrokers are generally held to what is known as the suitability standard. This could change as the Securities and Exchange Commission (SEC), under Congressional mandate, is considering extending the fiduciary standard to include brokers. But what is the fiduciary standard and what does it really mean in practical terms to investors?
EL CAP has published an in-depth report that takes a practical look at fiduciary obligations and what investors should understand about them. “Many investment managers tout their fiduciary obligations as a seal of approval for the products and services they sell,” said Andrew Haigney, Managing Director of EL CAP, “yet beyond just a good marketing sound bite, there is little understanding of what fiduciary duty is in practical terms.” He continues, “Contrary to popular belief, fiduciary duties aren’t clearly defined in regulation, in fact the term fiduciary doesn’t even appear in the underlying law that regulates advisers, it was the courts that deemed advisers to be fiduciaries in the early 1960s.”
The EL CAP report addresses issues that include the inherent conflicts of interest that exist when advisers recommend in-house portfolio management, disclosure issues, and the confusion over where sales and marketing activities end and fiduciary duties begin. “It is vitally important that investors understand the practical side of fiduciary obligations and not get lulled into a false sense of security. The risk that advisers are disclosing away the essence of their fiduciary duty in the fine print is very real,” said Mr. Haigney.
The report is timely given that the SEC is considering expanding fiduciary obligations to include brokers. Mr. Haigney said, “There is a perception that holding brokers to the fiduciary standard will cure the ills of Wall Street, yet absent complex court opinions, no one has really put the fiduciary standard under a microscope.” Mr. Haigney added, “It remains to be seen what, if any, changes will result from the SEC study, but when it comes to investor protection it is clear to us that there are no fail-safe regulations and we are far from regulatory utopia.”
About EL CAP
EL CAP, Inc. (http://www.elcapinc.com) is a Registered Investment Adviser registered with the Securities Division of the State of Vermont. The firm provides investment consulting services to individual investors, corporations, foundations, trustees, and endowments.
Sarah Scranton, CFA and Andrew Haigney founded EL CAP in 2009. Sarah and Andrew each have in excess of twenty years of institutional investment experience. Their institutional backgrounds transcend both the “buy-side” and “sell-side” as well as the equity and fixed income markets. Most recently Sarah was Principal and Senior Portfolio Manager with Freedom Capital Management where she was responsible for managing institutional fixed income portfolios and Andrew was First Vice President, Institutional Equity Sales at Merrill Lynch where his clients included mutual funds, hedge funds, registered investment advisors, banks and trust companies.
If you'd like a copy of the full report or for more information about EL CAP, please call (802) 735-2324 or e-mail firstname.lastname@example.org.