05.06.2018 12.08 CDT
There is significant evidence that consumers are placing their trust - and their money - with financial professionals who have financial incentives that conflict with consumers’ best interests. It does not appear that the current debates over professionals’ standards of conduct will make real progress in addressing this issue.
Dancing on the Head of a Pin
Regulators and courts may focus on the different rules for “investment advisers” and “brokers.” But, in the real world, this distinction confuses investors and undermines consumer protections.
There are key legal differences between investment advisers and brokers. However, consumers do not understand the implications of these differences. Consumers’ confusion is exacerbated by industry advertising, with references to “financial advisers,” “wealth managers” and “financial consultants” further blurring the difference between investment advisers and brokers.
10.05.2018 06.37 CDT
The SEC’s proposed new rules require broker-dealers’ obligations to act in customers’ “best interests.” The SEC proposal, in some ways, fills some of the gaps created by the recent court decision to invalidate DOL regulations expanding the definition of ERISA “fiduciary.”
The SEC Enters the Fiduciary Fray
The SEC has now weighed into this fiduciary fray, proposing new rules governing the behavior of broker-dealers.
The SEC has proposed new rules governing the behavior of broker-dealers. Under this proposal a broker- dealer “shall act in the best interest of the retail customer . . . . without placing the financial or other interest of the [broker-dealer] ahead of the retail customer.” The primary requirements of “best interest” are that broker-dealers disclose fee structures and not place their financial interests ahead of customers’ interests.