(Washington)

The wealth management industry will likely find itself pleased this week, as many may sense victory in the long battle against the DOL’s fiduciary rule. The SEC has now released its own proposal for a new fiduciary rule, and the rule looks favorable. The new rule would place less onerous restrictions on brokers and advisors. It will not ban any single conflict of interest, but would place a responsibility to disclose certain conflicts of interest to clients and take steps to mitigate their effects. The rule does not contain a specific provision allowing clients to sue their brokers for misbehavior. The SEC would also disallow the use of blurred titles, such as “financial advisor”. The SEC approved the rule by a 4-1 vote and it will now have an official comment period.

FINSUM: The one dissenting vote blasted the rule as a continuation of the status quo. To be honest, the proposal sounds quite favorable to the industry, with many saying it is not really a fiduciary rule (it doesn’t seem to be), and we were not expecting such a mild outcome. We think Congress will likely come down hard on the SEC. This is far from a done deal.