Displaying items by tag: fiduciary

Friday, 08 October 2021 21:09

DOL Readies Major Expansion of Fiduciary Rule

(Washington)

Joe Biden has picked Lisa Gomez to head the Employee Benefits Security Administration at the Department of Labor. And speaking to senators this week, she made a comment which clearly signals the direction of the Department. She said “there’s nothing that is more central to ERISA than defining who is a fiduciary”. Speaking about her pending work for the DOL, she said she plans “to be briefed on the efforts of looking at the definition of a fiduciary in different contexts, and taking another look at the conflict of interest rule and how it would apply in different situations”. She continued “Determining exactly who is a fiduciary in different contexts … has been the source of disagreement and it’s been a long road to get there”.


FINSUM: The writing is on the wall at the DOL and SEC. The Biden administration is starting to flex its muscle and will beef up regulation.

Published in Wealth Management
Thursday, 17 December 2020 16:33

Dissolve Reg BI says House to Biden

(Washington)

The House Financial Services Committee sent a very strong message to president-elect Joe Biden this week: dissolve Reg BI. Chaired by Maxine Waters, the committee said that the Trump administration had "taken several actions that have eroded shareholder rights, established regulatory barriers to shareholder engagement, increased issuer involvement in the proxy voting advice process and stripped away fundamental investor protections, including safeguards around private markets, where investors have few protections”, and that Biden should take care of the issue by getting rid of Reg BI, and separately, CRS altogether.


FINSUM: Industry experts seem to agree that the Biden Administration is unlikely to completely unwind Reg BI, if only because getting a new rule through would require Congressional approval. While that could still happen depending on how the Georgia runoffs go, it seems more likely the new SEC team would just employ very strict enforcement of Reg BI.

Published in Wealth Management
Tuesday, 17 September 2019 12:10

Brokers Struggle as SEC Reg BI Enters Legal Limbo

(Washington)

It feels like a complete repeat of the DOL’s fiduciary rule. With less than a year to go until implementation (June 2020), the SEC’s new Regulation Best Interest has just entered legal limbo. Perhaps even more worrying than the recent lawsuit from seven states is the fact that leading industry figure Michael Kitces’ firm, XY Planning Network, has just sued the SEC in New York to help block the rule. Kitces is trying to build on the FPA’s legacy of defeating regulators, such as it did in 2005 with the “Merrill Lynch rule”. It is highly unclear what the ultimate outcome of these suits might be, which means brokerages are having trouble committing resources to comply with them.


FINSUM: The chances that this rule gets implemented in its current form seem small, which means it that it is unwise to invest too much into compliance at this point. Everyone still has a bad taste from the money spent complying with the defunct DOL fiduciary rule.

Published in Wealth Management
Tuesday, 17 September 2019 12:06

RIAs May Be Growing Too Fast

(New York)

RIAs have been growing at breakneck speed for years. Their growth rates are pretty much the envy of everyone else in finance. But to be honest, they may in fact be growing too fast. Take for instance the case of Creative Planning, a Kansas-based RIA that has tripled its client assets to $42 bn since 2016. Alongside the tremendous growth they have also seen trouble, such as an SEC fine for improper radio advertising and another less infraction. The bigger problem for RIAs is that their own internal systems for control, compliance, and governance may be quickly overwhelmed by the growth they are seeing.


FINSUM: RIAs who are growing organically are having trouble keeping up, but the ones growing through acquisition might have even more trouble, especially with keeping costs manageable considering all the overlap.

Published in Wealth Management

(Washington)

In what comes as a real eye opener, the House passed a bill this week that would block the SEC’s ability to enforce its new fiduciary rule. The driving force behind the rule, you guessed it, Maxine Waters. The measure came as part of a broader bill regarding the funding of federal agencies. The bill now heads to the Senate, where it will likely be changed and then re-voted on. Democrats, who are in charge in the House, are worried the SEC’s rule does not go far enough to protect investors.


FINSUM: The interesting thing here is that this bill is likely not totally dead in the Senate. We wonder how hard the Democrats will stick to this part of it.

Published in Wealth Management
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