If there was ever exciting news in the fiduciary rule saga, this is it. The Wall Street Journal is reporting that the SEC will deliver a proposed comprehensive fiduciary rule in the second quarter of this year. The challenge of delivering a rule governing all accounts will be very challenging however, even as the SEC says it is fast-tracking development, as it will be bombarded from both sides. One of the directors from the Consumer Federation of America puts it bluntly, “It’s difficult to see how they can come up with a solution that does not land them in court … If they propose a rule we like, industry will sue them. If they give industry a disclosure-based best interest standard that they want, we’ll sue them”.

FINSUM: The SEC is in a tough position, but them coming up with a proposal for a comprehensive rule would be a step in the right direction.

Published in Wealth Management
Monday, 30 October 2017 05:31

Study Shows Robos Need More Regulation

(New York)

Robo advisors have been the talk of the industry for the last several years, and they are no longer merely the domain of new startups. Big wealth management players now host their own robo startups. However, a pair of new studies, including out of University of Pennsylvania, say that robo advisors cannot sufficiently monitor whether their portfolios are in a client’s best interests. According to a report by another asset manager, this means they are falling short of fiduciary standards. The industry has grown steadily in recent years and some think it is set for bigger growth in the near term. One report suggests that robos be given their own regulatory category.

FINSUM: While having their own regulatory category seems sensible, it would be an unfair advantage over human advisors.

Published in Wealth Management

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