Displaying items by tag: DoL

(Washington)

Advisors all across the country see a major flaw in the SEC rule. Fiduciaries feel they are being completely short-changed by the rule because the way the SEC has drafted it makes advisors and brokers look like identical twins, almost eliminating the distinction from a client’s perspective, according to the “Raise Your Voice” campaign, or a group of advisors pushing against the rule. “The proposed rules depict broker and advisers as essentially the same, like identical twins, but without identical investor protections”, says the spearhead of the campaign, continuing that “The legal, contractual, business and cultural differences dividing brokers and advisers are important and must be clearly stated and explained”. The campaign is encouraging advisors to make their opinions heard while the SEC comment period is open (it closes August 7th).


FINSUM: The SEC tried to make a rule that avoided over-delineating things as part of an effort to avoid loopholes, but this non-standard approach has made many quite angry. We suspect the rule will be edited significantly.

Published in Wealth Management

(Washington)

If there is a core element to the debate going on over the SEC rule, it is whether the rule actually does anything new. Some argue that the SEC’s best interest rule is just a rehashing of the well-established FINRA suitability standard. For instance, the CFP has commented that “Our concern is that as introduced, the rule proposal may offer the appearance but not necessarily the reality of increased investor protection”. There are two areas of consternation about the rule, at least as far as consumer groups are concerned—the lack of a definition of “best interest”, and how the rule has differing standards for brokers versus fiduciaries.


FINSUM: While it does seem unconventional, the SEC’s lack of a definition of “best interest” means it may ultimately be more broadly applicable than defining it, and thus creating loopholes.

Published in Wealth Management
Friday, 22 June 2018 09:41

SEC Defends Fiduciary Rule

(Washington)

The SEC has been getting a grilling over its new best interest rule. The industry doesn’t like its proposed disclosure document (CSR) or its restriction on the use of titles, while consumer protection groups say the rule is not stringent enough. Yesterday, SEC chairman Clayton faced questions over the rule from the House Financial Services Committee. Answering questions on whether the rule went far enough and whether the rule should be harmonized between brokers and advisors, Clayton explained that brokers and fiduciaries have different relationships with clients and said “There is no conflict-free relationship … Disclosing [conflicts], mitigating them, making sure everybody understands what the motivations are ... that's what I want to do in this space”.


FINSUM: We think Clayton stood his ground quite well, and we particularly like that final quote, which was grounded in realism.

Published in Wealth Management
Thursday, 21 June 2018 10:05

The SEC Rule is Getting Slammed

(Washington)

For an industry that was initially happy with the SEC best interest rule proposal, things have really gone south. On top of the battle over the use of the advisor/adviser title, industry critics are slamming the proposal for a new 4-page disclosure document called a “Customer Relationship Summary” which is supposed to “synopsize an advisor’s services, fiduciary status, fees and other information”. Many say the document is too long and arduous for advisors and will only confuse clients. Charles Schwab, for instance, says that the CSR “could saddle advisors with duplicative and unnecessary compliance challenges”. The firm wants a one-page version.


FINSUM: It is interesting to see that the more the industry has dug into the rule proposal, the more it dislikes it. We wonder how much the SEC will revise the rule following the end of the comment period.

Published in Wealth Management
Wednesday, 20 June 2018 08:39

Merrill Lynch Might Reverse Commission Decision

(New York)

Back in late 2016, Merrill Lynch announced that it was abandoning commissions for its brokers. On the back of the shift to the DOL’s fiduciary rule, the firm was forcing clients to either move to fee-based accounts or downgrade to its Merrill Edge discount brokerage. Now, with the DOL rule gone, the firm is considering reversing that decision. Merrill admits that some clients left the firm because the cost of fee-based accounts was more expensive than commissions. Merrill will be considering a change for a 60-day review period.


FINSUM: Having only fee-based accounts always seemed like a bad idea to us because a large subset of customers would see their total fees rise significantly. However, the move fit nicely with the pre-DOL rule environment. Now that things have changed, we suspect the stance might be reversed.

Published in Wealth Management
Page 36 of 47

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…