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Adviser Regulation Caught Up in Partisan Era, Making it Hard to Plan for Future

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Originally posted on InvestmentNews by Mark Schoeff, Jr.

Opponents of the Securities and Exchange Commission’s recently approved investment advice reform — including the SEC member who voted against it — suggest the regulations will be revisited and changed by a new SEC in a Democratic administration.

If one of the two dozen or so Democrats in the hunt for the White House topples President Donald J. Trump next year, he or she will have the opportunity to appoint a new SEC chairman and give the panel a Democratic majority.

In recent years, a change in political tide has brought with it a reversal in the course of investment advice regulation.

The Obama administration championed the Labor Department’s fiduciary rule, which was supported by many investor advocates and investment advisers but strongly opposed by Republican lawmakers and most of the financial industry. It died in court when the Trump administration stopped defending the measure.

The SEC’s advice package — the centerpiece of which is Regulation Best Interest designed to raise the broker advice standard — was approved by the agency on a 3-1 vote, with Democratic member Robert Jackson Jr. dissenting and most of the financial industry as well as the GOP cheering it on.

. . .

One fiduciary advocate said investment advisers, who will continue to adhere to a fiduciary duty under the SEC’s new rules, must leave politics aside and distinguish themselves in the marketplace.

“Washington is so politicized that waiting for a new administration is not a plan,” said Knut Rostad, president of the Institute for the Fiduciary Standard. “RIAs need to speak out vigorously to differentiate themselves, and states need to fill the void, as some are doing now.”

Read the full article on InvestmentNews.

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture