"Are advisers going to be inclined to make the [rollover] recommendation? They may pass up lower-balance rollovers they would otherwise pursue. There is quite a bit of work in getting all the information on an employer’s retirement plan that will be needed to make a rollover recommendation."
Jason Roberts, ERISA attorney and CEO of the Pension Resource Institute
"Broker-dealers expected to be gun-shy on rollover recs under SEC's Reg BI"
Regulation Best Interest, or Reg BI, is what you might call the SEC’s version of a fiduciary rule. It was approved by SEC commissioners in June.
But one commissioner, Robert J. Jackson, voted against it. And opinions in the industry were (and are) divided as well.
Even many who are proponents of Reg BI acknowledge it could cause confusion and compliance challenges for the industry.
Take a look at what various stakeholders said about Reg Bi this year, with one caveat -- some said they hadn't fully studied the final rule at the time of their comment. (Photo: Michael Scarcella/ALM)
"Some critics have gone so far as to fault Reg BI for failing to require elimination of all conflicts of interest. This criticism is misguided -- there are conflicts of interest inherent in all principal-agent relationships, and the broker-customer relationship and the investment adviser-client relationship are no exception. Reg BI recognizes that these conflicts exist, and requires that firms address those conflicts and provide recommendations that are in the best interest of their retail customers."
SEC Chairman Jay Clayton
"How SEC Chair Clayton answered 7 criticisms of Reg BI IA fiduciary guidance
(Photo: Diego M. Radzinschi/ALM)
"Our objection to the rules is that they won’t do what they pretend to do, which is improve protections for investors. Instead, this makes things worse."
Barbara Roper, Director of Investor Protection, Consumer Federation of America
"My gut level feeling for broker-dealers is you are already behind schedule. There is so much there, it’s going to be really hard to get in compliance."
Fred Reish, Chair of Drinker Biddle’s Financial Services ERISA Team & Retirement Income Team
"Reish: Broker-dealers already behind the ball in prepping for Reg BI"
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"It hurts [my practice] because it muddies the water. It makes it harder for me to distinguish myself as a true, what I call, bona fide fiduciary from those who say they’re fiduciaries acting in the best interest of their clients [per Reg BI], or what I call a pretend fiduciary."
Ron Rhoades JD, CFP
"Ron Rhoades: SEC Reg BI Is Greatest Securities Fraud In History"
"The costs to implement will no doubt be significant, but, we believe, worthwhile to uniformly enhance investor protection to the level investors should and do expect, while preserving investor choice and access to investment advice."
Kenneth E. Bentsen, Jr., President and CEO, SIFMA
"Continuing to mislabel this new rule as a ‘best interest’ standard risks continuing to confuse and mislead consumers. In a surprise, the SEC’s rule instead weakens the interpretation of the Investment Advisers Act, undercutting decades of accepted practice. By removing the proposed language that required advisers to put retail investors’ interests ahead of their own, the SEC has now explicitly rejected that as a requirement."
Nancy LeaMond, AARP Executive Vice President and Chief Advocacy and Engagement Officer
"As the rule stands, it seems that there may be much ambiguity in the analytic process that advisors must now undertake to determine whether the rollover transaction is in any given client’s best interests. Ultimately, the SEC may provide additional guidance on the best interest standard with respect to rollovers. In the alternative, the SEC’s eventual enforcement of the rule may provide clarity for advisors."
William Byrnes, Esq., LL.M., CWM and Robert Bloink, Esq., LL.M., co-authors of 2019 Tax Facts on Investments and other Tax Facts books
"SEC's Reg BI Adds Unexpected Fiduciary Hurdle for Retirement Advisors"
"Its use of the phrase ‘best interest’ is frankly not the same as the fiduciary standard RIAs have always had in place. That will create confusion in the marketplace."
Ric Edelman, founder and executive chairman of Edelman Financial Services
"How SEC Chair Clayton answered 7 criticisms of Reg BI IA fiduciary guidance"
(Photo: Melanie Waddell/ALM)
Advertisement
"We support a best interest standard that preserves commission-based business models as well as product choice and access to professional financial advice. While we appreciate the intent of the final rule there are a number of key areas where the ultimate impact on consumers is unclear."
Marc Cadin, AALU President and CEO
"Are advisers going to be inclined to make the [rollover] recommendation? They may pass up lower-balance rollovers they would otherwise pursue. There is quite a bit of work in getting all the information on an employer’s retirement plan that will be needed to make a rollover recommendation."
Jason Roberts, ERISA attorney and CEO of the Pension Resource Institute
"Broker-dealers expected to be gun-shy on rollover recs under SEC's Reg BI"
Regulation Best Interest, or Reg BI, is what you might call the SEC’s version of a fiduciary rule. It was approved by SEC commissioners in June.
But one commissioner, Robert J. Jackson, voted against it. And opinions in the industry were (and are) divided as well.
Even many who are proponents of Reg BI acknowledge it could cause confusion and compliance challenges for the industry.
Take a look at what various stakeholders said about Reg Bi this year, with one caveat -- some said they hadn't fully studied the final rule at the time of their comment. (Photo: Michael Scarcella/ALM)
"Some critics have gone so far as to fault Reg BI for failing to require elimination of all conflicts of interest. This criticism is misguided -- there are conflicts of interest inherent in all principal-agent relationships, and the broker-customer relationship and the investment adviser-client relationship are no exception. Reg BI recognizes that these conflicts exist, and requires that firms address those conflicts and provide recommendations that are in the best interest of their retail customers."
SEC Chairman Jay Clayton
"How SEC Chair Clayton answered 7 criticisms of Reg BI IA fiduciary guidance
(Photo: Diego M. Radzinschi/ALM)
"Our objection to the rules is that they won’t do what they pretend to do, which is improve protections for investors. Instead, this makes things worse."
Barbara Roper, Director of Investor Protection, Consumer Federation of America
"My gut level feeling for broker-dealers is you are already behind schedule. There is so much there, it’s going to be really hard to get in compliance."
Fred Reish, Chair of Drinker Biddle’s Financial Services ERISA Team & Retirement Income Team
"Reish: Broker-dealers already behind the ball in prepping for Reg BI"
Advertisement
"It hurts [my practice] because it muddies the water. It makes it harder for me to distinguish myself as a true, what I call, bona fide fiduciary from those who say they’re fiduciaries acting in the best interest of their clients [per Reg BI], or what I call a pretend fiduciary."
Ron Rhoades JD, CFP
"Ron Rhoades: SEC Reg BI Is Greatest Securities Fraud In History"
"The costs to implement will no doubt be significant, but, we believe, worthwhile to uniformly enhance investor protection to the level investors should and do expect, while preserving investor choice and access to investment advice."
Kenneth E. Bentsen, Jr., President and CEO, SIFMA
"Continuing to mislabel this new rule as a ‘best interest’ standard risks continuing to confuse and mislead consumers. In a surprise, the SEC’s rule instead weakens the interpretation of the Investment Advisers Act, undercutting decades of accepted practice. By removing the proposed language that required advisers to put retail investors’ interests ahead of their own, the SEC has now explicitly rejected that as a requirement."
Nancy LeaMond, AARP Executive Vice President and Chief Advocacy and Engagement Officer
"As the rule stands, it seems that there may be much ambiguity in the analytic process that advisors must now undertake to determine whether the rollover transaction is in any given client’s best interests. Ultimately, the SEC may provide additional guidance on the best interest standard with respect to rollovers. In the alternative, the SEC’s eventual enforcement of the rule may provide clarity for advisors."
William Byrnes, Esq., LL.M., CWM and Robert Bloink, Esq., LL.M., co-authors of 2019 Tax Facts on Investments and other Tax Facts books
"SEC's Reg BI Adds Unexpected Fiduciary Hurdle for Retirement Advisors"
"Its use of the phrase ‘best interest’ is frankly not the same as the fiduciary standard RIAs have always had in place. That will create confusion in the marketplace."
Ric Edelman, founder and executive chairman of Edelman Financial Services
"How SEC Chair Clayton answered 7 criticisms of Reg BI IA fiduciary guidance"
(Photo: Melanie Waddell/ALM)
Advertisement
"We support a best interest standard that preserves commission-based business models as well as product choice and access to professional financial advice. While we appreciate the intent of the final rule there are a number of key areas where the ultimate impact on consumers is unclear."
Marc Cadin, AALU President and CEO
"Are advisers going to be inclined to make the [rollover] recommendation? They may pass up lower-balance rollovers they would otherwise pursue. There is quite a bit of work in getting all the information on an employer’s retirement plan that will be needed to make a rollover recommendation."
Jason Roberts, ERISA attorney and CEO of the Pension Resource Institute
"Broker-dealers expected to be gun-shy on rollover recs under SEC's Reg BI"
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