Brokers' requirement to apply the best interest standard to account and rollover recommendations stands to substantially impact financial services providers. (Photo: SEC)
Stakeholders predicted the finalized form of Regulation Best Interest, the Securities and Exchange Commission rule on broker-dealer conduct, would remain largely unchanged from last year's proposed version of the rule. But one aspect of the rule the SEC did change covers retirement plan rollovers to IRAs, recommendations on workplace plan distributions, and recommendations to place investors in brokerage or advisory accounts.
“After careful consideration of comments and feedback, the Commission has modified the rule text to state that an 'investment strategy involving securities' includes 'account recommendations',” the rule states.
“We interpret 'account recommendations' to include recommendations by broker-dealers of securities account types generally, as well as recommendations to roll over or transfer assets from one type of account to another (e.g., workplace retirement plan account to an IRA,” write regulators.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
