Comparison of Authentic and “SIFMA” Fiduciary Standards

October 20, 2009


  • “Prudence” is required
  • Do not mislead; disclose all material facts (compensation, fees, expenses) in writing
  • Control investment expenses
  • Avoid conflicts, or disclose conflicts and always attain fully informed consent
  • Managing conflicts in client’s interest
  • Recognizes best execution in 40 Act As a fiduciary principle


  • “Good professional judgment”
  • Does not address in testimony.
  • Does not address in testimony.
  • Avoid conflicts, or disclose conflicts, only sometimes w/ client consent.
  • Does not require managing the conflict, except to disclose it, per testimony.
  • Rebrands fair dealing obligations, suita­bility, limited disclosures, supervision and training as “core fiduciary principles.”


  • “Prudence” carries a legal duty that “professional judg­ment” does not. SIFMA makes no mention of “prudence” in its testimony.
  • Carroll would not say SIFMA believes disclosure of fees is required; he suggests brokers’ “business model” may permit Brokers to not disclose compensation, fees, expenses, etc.
  • Carroll would not say SIFMA believes brokers must control investment expenses; he does say all businesses try to control business expenses, generally.
  • SIFMA suggests “consent” is only sometimes required. It does not say fully informed client consent is always required.
  • Fully informed client consent means a client understands costs, risks, and benefits of conflict, as well as available alternatives
  • Managing the conflict in the client’s interest is fundamental to duty of loyalty

*SIFMA position based on October 6 testimony.

+ Comments based on comparison of testimony with authentic standard and additional remarks by Kevin Carroll, SIFMA Managing Director, in October 7 Webinar.

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