Who can you trust? Before he left office, President Barack Obama answered a question many investors ask with a new fiduciary rule requiring all financial advisers to put their clients’ interests first. Yet since President Donald Trump has taken office, he’s been trying to prevent this rule from being implemented.
With the federal fiduciary rule in limbo, one state legislator wants to place this in Nevada law.
Just a week after President Donald Trump ordered the U.S. Labor Department to move towards dismantling the fiduciary rule, State Senate Majority Leader Aaron Ford (D-Spring Valley) presented SB 383 to the Senate Commerce, Labor, and Energy (CLE) Committee. If it becomes law, SB 383 will essentially codify the federal fiduciary rule in Nevada state law by requiring investment advisers and stock brokers to abide by the same standard others in the financial industry must adhere to.
“It’s just removing the exemption from broker-dealers and investment advisers. […] Anyone giving investment advice will be required to abide by the fiduciary rule.” – Senator Aaron Ford
Why is this rule so important? Following his appearance at the witness table, I spoke with insurance agent Richard Munk. He’s worked in insurance for 37 years, and still holds licenses in four states. Munk explained how he exercises his fiduciary duty. “I must see if someone can afford the product one’s interested in, and whether that actually suits them.” Like many others in the financial industry, insurance agents are already required under state law to abide by the fiduciary rule.
If SB 383 becomes law, the loophole closes for those working in Wall Street brokerage firms. During testimony, Richard Munk shared two of his clients’ stories on how they lost money taking bad advice from investment advisers who were incentivized to sell them products they didn’t need. “For years, it’s made me angry because the big brokerage houses operated entirely under different standards. It was always scaring me, as seniors don’t have the opportunity to make that money back.”
During our conversation, Munk shared more horror stories from clients who were ripped off by other financial advisers. “There were times when I could tell they needed long-term care insurance, but they couldn’t afford it because they took bad investment advice. It was terrible. There was very little I could do about it.”
“Most seniors don’t have much investment knowledge. They’re easy targets. […] They can lose a great deal of money they can’t get back.” – Richard Munk, Las Vegas
These points were reinforced during testimony by Priscilla Maloney, a Reno based advocate for Nevada AFSCME retirees. She explained how public servants and other workers rely upon sound financial advice to ensure sufficient resources for retirement. “This is a great place to retire already. [… SB 383] moves Nevada forward as a safe place to retire.”
Ford handled questions from Senators Heidi Gansert (R-Reno) and James Settelmeyer (R-Minden) on how the expanded fiduciary rule will work in Nevada. Yet during testimony, no one in Las Vegas or Carson City testified against SB 383. Even as the federal fiduciary rule faces ongoing challenges from the Trump Administration, SB 383 is moving along in Nevada. Senate CLE Chair Kelvin Atkinson (D-North Las Vegas) promised a work session Friday, just in time to meet the first committee passage deadline.