Wealth Management


In what could be a very worrying sign for the industry, it is being reported today that the SEC may be inserting the word “fiduciary” in its new best interest rule. The word had been conspicuously absent, much to the chagrin of DOL rule advocates. However, the SEC’s own advisory committee now says the word should be included. The SEC’s Investor Advisory Committee saw a majority vote for the inclusion of the word and a fiduciary standard to be applied, something the SEC had diligently avoided until now. The Committee voted 16-3 in favor of the changes.

FINSUM: This seems very likely to now be included in the new rule. Does that mean it should no longer be called the BI rule, but the SEC Fiduciary Rule?


Well the midterms are finally here. However, one thing has become apparent—how these elections will affect financial advisors has not been discussed nearly enough. One of the big concerns advisors should have is about what happens if the Democrats take the House. In this scenario, it seems likely regulation would grow much toughed as fire & brimstone-like Maxine Waters (D-Calif.) would taken the helm of the House Financial Services Committee. Additionally, Republican-led deregulatory measures could be scuttled. One area of possible positivity could be on new legislation for retirees, including new measures to encourage people to save for retirement.

FINSUM: Perhaps the biggest worry regards some sort of defeat of the new SEC rule with renewed support for the DOL rule 2.0. The Democrats fiercely advocate for a comprehensive fiduciary standard, so their ascendance in the House could lead to that becoming a reality.

(New York)

Over the last couple of years there has been a movement on the fringes of the active management space. That movement was towards funds that only charge investors full and/or rising fees if they outperform a given benchmark. If they underperform, their fees would fall back to ETF levels. Well, that idea has taken a big step recently as major fund provider AllianceBernstein has a handful of so-called “fulcrum funds”. The largest is the AB FlexFee Large Cap Growth Advisor Fund, with $106m under management. A top figure at AB put the goals most clearly, saying “The big impact of this will be if we can take money from passive, or money that would’ve gone there … That’s the ultimate goal here”.

FINSUM: Fulcrum funds make a lot of sense for active managers and clients. If the fund managers do their job and seriously outperform a benchmark, then higher fees make sense. If they don’t, then fees stay low.

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