Displaying items by tag: best interest

(New York)

Financial advisors appear to not give a hoot about the forthcoming SEC Best Interest rule. Fatigue from the endless on-again-off-again DOL saga seems to have taken hold of the industry. A new survey by Fidelity found that 40% of advisors says that even though they are aware of the proposals, they are currently taking no action. A further 78% of advisors say they will need help in assessing and evaluating the proposals.

FINSUM: While there is definitely some fatigue, the reality is that most advisors did a lot of preparation for the fiduciary rule, and thus they think they are in a good position for the forthcoming SEC rule.

(Washington)

Just when it finally felt like it was gone, the fiduciary rule appears to be back from the dead. Not only is the DOL working on a new version to be debuted in 2019, but it is reportedly enforcing the current version intensely. According to ThinkAdvisor, “attorneys with Drinker, Biddle and Reath report that both the Labor Department and Securities and Exchange Commission are leveraging enforcement initiatives at a historic level of tenacity”. Fred Reish, top industry lawyer concurred, saying “Now that the fiduciary rule has been terminated, I think the focus at DOL is more on enforcement”. In terms of how the DOL is opening up investigations, a partner at Drinker, Biddle & Reath says that “They start with ‘hello, we are the DOL, show us how you do ERISA,’ and from there take a very broad based approach”.

FINSUM: We are confused by what is going on at the DOL. Following Trump’s appointment of the new chief at the DOL there seemed to be a hands-off approach being adopted (e.g. not pushing the rule further in court). Now everything seems to have reversed. Stay tuned.

(Washington)

In what arrives as fairly shocking and quite alarming news, the DOL rule is coming back. After being effectively killed seven months ago, the DOL rule had all but disappeared. However, in an unpredictable turn of events, the DOL has announced it is working on a new version of the rule that will be debuted in 2019. The DOL released in its fall agenda that is was working on an updated rule in light of the 5th circuit court’s ruling, and that this would be debuted in Fall 2019. One prominent industry lawyer comments that “With both DOL and the SEC working on investor protection rules (and with both agencies targeting the same deadline), this hints that the two agencies may be working together to develop coordinated rules to protect American savers”.

FINSUM: A new DOL rule? Just when everyone thought we were past it! We expect this will be a toned down rule compared to the first version, however.

(Washington)

The SEC received over 6,000 comment letters in its public comment period for its new best interest rule. The regulator is currently reviewing those, but the big question is what is the rule’s implementation timeline? A top director at the SEC recently declined to comment on a timeline, saying “We are in the process of going through comments to see what changes if any we should be recommending”, but refused to give a date.

FINSUM: The anecdotal evidence and chatter we are hearing is that the SEC is going to try to move quickly to finalize and implement this rule. Stay tuned.

(Washington)

In a sign of just how wide-reaching the coming SEC Best Interest rule truly is, FINRA has just acknowledged that the Suitability Rule might be on the chopping block. FINRA’s Suitability Rule requires that brokers choose a product suitable for their client, but is a weaker standard than the proposed BI rule. “If [Regulation Best Interest] is adopted, then we would need to look at our rule set to see if any changes are appropriate … For example, is our suitability rule appropriate? But that is down the road. We need to see how Reg BI is adopted”, says Robert Cook, the CEO of FINRA.

FINSUM: This is not really a surprise, as the BI rule would basically make the Suitability Rule redundant. However, it is certainly a wake up call that things are changing quickly.