Policymakers Should Remain Strategy Neutral
Investors must have access to a full range of investment strategies and products to effectively meet their diverse financial goals. The economic and investment landscape is dynamic, requiring flexibility and adaptability. Investment advisers serve clients with unique circumstances and objectives and, as fiduciaries, must retain the discretion to make decisions that they reasonably believe are in their clients’ best interests.
To ensure this flexibility, laws and regulations should neither explicitly nor implicitly favor one investment strategy over another, nor should they effectively dictate specific investments or strategies for clients. Such actions risk unintended consequences for investors, including restricting an investment adviser’s ability to select the most appropriate investment options based on its expert judgment and a client’s specific goals.
The IAA supports policies that are strategy neutral and opposes policies that limit the tools available to investment advisers. For instance, the IAA opposes:
- Favoring passive over active strategies: Policies that explicitly or implicitly favor passive management over active management. Both active and passive strategies, as well as hybrid approaches, are essential for serving client needs and supporting healthy markets.
- Limitations on investment criteria: Measures that restrict investment advisers’ ability to evaluate and incorporate factors they reasonably believe are important to achieving their clients’ financial goals.
- Mandated consideration of specific factors: Requirements that compel investment advisers to consider factors they do not believe will help achieve or believe may hinder their clients’ goals.
- Barriers to proxy voting: Actions that make it more difficult or expensive for fiduciaries to vote proxies in alignment with their clients’ best interests.
- Different Standards for Different Methods of Advice Delivery: Efforts to treat different delivery methods of advice, such as providing advice through a digital platform, differently under the fiduciary framework of the Advisers Act.
The IAA remains committed to engaging with policymakers to ensure that laws and regulations uphold strategy neutrality, preserve investment advisers’ ability to exercise fiduciary judgment, and maintain the broad range of investment tools necessary to serve the diverse needs of their clients.