(Washington)

The SEC best interest rule has been facing a very tough time. All sides of the argument seem to be against it. Consumer protectionist groups hate the muddled and weak delineating between brokers and advisors, while the industry dislikes the strong rules on title use. Now, there is a new weak spot in the SEC’s approach. The SEC has decided to have “roundtables” with consumers to discern their level of understanding of the rule and get feedback. The move is unusual and the SEC has not disclosed who or how they will do it. All sides again hate this idea, with the head of the Consumer Federation of America saying “Asking investors whether they like the disclosures is virtually meaningless … That needs to be done by disclosure testing experts who know how to design the tests and interpret the results”.

FINSUM: It is very obvious that the SEC’s current poorly defined delineation between brokers and advisors is not going to be easy to understand for consumers. We suspect any kind of consumer testing will help them realize that, but this does seem to be a rather odd and opaque approach.