The head of the U.S. securities industry trade association is calling on the brokerage business to help lead efforts to address emerging issues, such as cybersecurity and the challenges of dealing with senior investors.
Speaking at SIFMA’s Private Client Conference Wednesday in Chicago, Kenneth Bentsen, Jr., president and CEO of the U.S. Securities Industry and Financial Markets Association (SIFMA), said that the industry needs to help lead the way to deal with emerging issues and threats. “The industry has changed dramatically since the last crisis, and that change continues,” he said. “We must also recognize that the industry has a responsibility not just to respond, though response is often necessary, but also to lead.”
One of the emerging issues he highlighted is the aging population, and the rising number of senior investors. “Over the last several years, our members have identified the need to update rules, and perhaps laws, to better equip regulators and advisors on how they confront an aging client, particularly those with cognitive impairment,” he said, noting that rules that made sense when they were implemented may no longer work as the environment evolves.
“This is an area where collaboration between our regulators and the industry is critical, and I am pleased to say, is happening,” he said. Bentsen Jr. reported that firms and SIFMA staff are working with regulators “to develop a model framework” designed to enable regulators and the industry to protect the interests for older investors.
Similarly, Bentsen Jr. said that the industry is collaborating with the government to improve its cyber defenses, by developing standards, enhancing information sharing, and improving recovery protocols and processes. “This cannot be
regulated away, and it must be an iterative and ongoing process among all participants, regulator and regulated,” he said.
In other areas though, he noted that the industry and policymakers may not be on the same page. For instance, he warned that a forthcoming proposal from the U.S. Department of Labor to impose a fiduciary duty on brokers could needlessly restrict investor choice and raise investors’ costs.
Similarly, at the same conference, Randy Snook, executive vice president of business policies and practices at SIFMA, warned that the critical role of retail investors in capital markets “could be damaged by regulation which unduly restricts or limits investor choices in the name of investor protection.”
In addition to the fiduciary duty proposal, he pointed to possible systemic risk regulation for the asset management industry, and adding layers of regulation in the fixed income markets, as measures that could make investing more costly, or limit the choice of retail investors.