SEC New Rule: 'Regulation Best Interest'

[DHK]

Since the annuity forum is where we talk the most about "Fiduciary standards", I thought it would be best to put it here for continuity sake.

SEC new rule: 'Regulation Best Interest'

At its just-completed Open Meeting, the SEC Commissioners voted 4-1 to move ahead with proposing the following:

A new rule—to be called “Regulation Best Interest" — that would raise the standard of conduct for broker-dealers and their registered representatives when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer to require the broker-dealer/registered representative to act in the best interest of the investor without putting the interest of the broker-dealer/registered representative ahead of the investor’s interest.

A new rule to require registered investment advisers and broker-dealers to provide a brief relationship summary to retail investors. This rule would require that a new Form CRS — for “Customer Client Relationship Summary”— be provided to investors. Form CRS would disclose, among other things, key facts about the nature of the relationship between the customer and the broker-dealer or investment advisor, fee structures and the particular business model of the firm.

A part of the new proposed rules would implement “labeling” requirements that would regulate the use of certain titles. This would prohibit broker-dealers and their representatives from using the terms “advisor” and “adviser” unless it/they are an investment advisor registered under the 1940 Investment Advisors Act (the “40 Act”), and subject to the fiduciary duty generally required for such investment advisors.

A Commission interpretation of the existing standard of conduct for investment advisers registered under the 1940 Investment Advisors Act. The purpose of this interpretation would be to clarify for investors and investment advisors alike the SEC’s views on what the 1940 Act standard of conduct for investment advisors actually means and what behaviors and actions it requires of investment advisors.

NAIFA will take some time to review the nearly 1,000-page proposal and submit detailed comments.

First, sounds like additional paperwork, but around a 'best interest' standard rather than a 'fiduciary' standard.

Second, if you only have Series 6/7/63, etc., you can't call yourself an 'advisor' unless licensed as such with a Series 65/66 or qualifying exempt designation and registered for investment advice.

Third, this only applies to registered reps with a broker/dealer. Insurance only agents are not part of this.

This would seem to be a simple, straight-forward, and easy to implement & monitor ruling. Of course, the devil is in the details.

 

[VolAgent]

I love the fact they are going to restrict the use of advisor. That term was used so much as to be meaningless. You can disagree with who gets to use it, but I love the fact it will finally be defined as to who is and is not an advisor.

 

[pfg1]

I love the fact they are going to restrict the use of advisor. That term was used so much as to be meaningless. You can disagree with who gets to use it, but I love the fact it will finally be defined as to who is and is not an advisor.

Ditto, though I doubt it will make alot of difference on the street until someone gets hammered for breaking the rules.

 

[eersfan]

Have no fear....they'll move the "goalposts" again before they're cemented in place. We have Pocahontas to thank for this. Only the Feds can make up a solution...in search of a problem.

 

[walthamny]

The financial advisor title rule wont make much of a difference. For the general public, the person who wears a suit and sells life insurance, reviews beneficiaries of group life and benefits and make sure old retirement accounts have correct beneficiaries, they already accept you as their financial advisor. This rule will matter for some print advertising.

It is a missed opportunity to fix 2 widespread abuses in the industry. One of them is selling of FIA to anyone with the same company same product and same riders to everybody who has an IRA. Somehow state regulators give a pass on this.

The other one is selling of non traded REIT's to folks saying it is safe as gold, safer than US treasury and you can exit anytime. Insurance industry has nothing to do with this abuse.

My wish list also includes jail time for regulators for not doing their job and wasting public resources and public trust.

 

[Jenifer Williams]

The financial advisor title rule wont make much of a difference. For the general public, the person who wears a suit and sells life insurance, reviews beneficiaries of group life and benefits and make sure old retirement accounts have correct beneficiaries, they already accept you as their financial advisor. This rule will matter for some print advertising.

It is a missed opportunity to fix 2 widespread abuses in the industry. One of them is selling of FIA to anyone with the same company same product and same riders to everybody who has an IRA. Somehow state regulators give a pass on this.

The other one is selling of non traded REIT's to folks saying it is safe as gold, safer than US treasury and you can exit anytime. Insurance industry has nothing to do with this abuse.

My wish list also includes jail time for regulators for not doing their job and wasting public resources and public trust.

Looks quite interesting.

 

[Justin Bilyj]

The other one is selling of non traded REIT's to folks saying it is safe as gold, safer than US treasury and you can exit anytime. Insurance industry has nothing to do with this abuse.

I've seen muni-bond marketing crossing that line also...

 

[DHK]

I just wanted to bump this thread so I could ignore the "ignored member" comment and thread about trying to build some other kind of quote engine.

Feel free to keep bumping this.

 

[rousemark]

Wish they would change their name... Every time I see "SEC" in the thread title, I think about Tennessee football..

 

[scagnt83]

Wish they would change their name... Every time I see "SEC" in the thread title, I think about Tennessee football..

The Vols still have a football team?