Wealth Management


Advisors look out, the potentially easy Fiduciary Rule you have been counting on is now seriously in doubt. For several months the consensus view was that the DOL would create a companion rule to the SEC’s Best Interest rule, but in a significantly less onerous way than the original Fiduciary Rule. That assumption now looks misguided because DOL chief Acosta has resigned, meaning there will be a major leadership change and a likely revisiting of strategic priorities.

FINSUM: Acosta has been pretty industry friendly, so this review is nerve-racking as there seems to be an equal likelihood of a either a tougher new chief, or a similar/relaxed one.


Have you been concerned about the newest iteration of the DOL’s Fiduciary Rule, which is due out by the end of this year? You should have been. While investors have been anxious about it, the generally more industry-friendly DOL under Trump has alleviated some anxieties. However, some thing very big just happened—DOL chief Acosta has resigned (amidst the Jeffrey Epstein scandal). That means there is likely to be a significant review and change of priorities as new leadership comes in. That leaves the fate and direction of the DOL very uncertain.

FINSUM: This is not necessarily good news. One could get giddy and think the Fiduciary Rule might no longer be a priority, but there is an equal chance the next head of the department may come in and say “this isn’t tough enough”.


Jay Clayton came out punching for the SEC’s new Best Interest Rule this week. The rule has faced a lot of criticism from all sides, but was finally approved internally. Now, Clayton is combatting critics. In particular, the SEC chairman is defending the harshest criticism of the rule—that it does not define “best interest”. Clayton argues that using a principles-based framework, which relies on a contextual definition of best interest depending on the situation in question, is a well-trod regulatory path and one that is superior to creating a definition for every scenario.

FINSUM: We don’t love this rule, but we agree with Clayton on this point. Having a highly defined rule leaves it more vulnerable to loopholes. With the current contextual structure, one has to worry whether their behavior could be considered “best interest” depending on an amorphous standard. It seems like a better way to keep bad actors in line.

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