A lot of brokers have been feeling good about the SEC’s best interest rule. While that may be misguided, the perception is that the rule is significantly less stringent than the DOL rule, and thus offers a better operating paradigm. However, developments with the rule are not looking favorable to those hoping for a loose regulatory structure. In House hearings recently, four out of five witnesses called to testify on the rule said that having no new rule would be better than having the BI proposal implemented. One top compliance firm thinks the SEC is moving towards a much more strict DOL-type rule, saying “We predict that the SEC is going to re-propose [Regulation Best Interest] to make it closer to a fiduciary standard because the states have come out [with their own initiatives]”.
FINSUM: We have said for some time that we do not believe the SEC rule will be implemented in anything near its current form. That is reality is looking ever more likely.