This article originally appeared on InvestmentNews by Mark Schoeff, Jr.

The Securities and Exchange Commission should rename Regulation Best Interest so investors aren’t confused about the difference between investment advisers providing fiduciary advance and a broker selling an investment product, fiduciary advocates said Thursday.

The Institute for the Fiduciary Standard released several recommendations to revise the broker advice standard, which went into force last summer, and related advice reform.

In addition to changing the name of Reg BI, it called for eliminating some broker conflicts of interest, such as compensation incentives for product sales, revising the disclosure Form CRS, and clarifying that investment advisers must avoid conflicts of interest rather than just disclosing them.

The “best interest” term in Reg BI misleads investors because it’s the same phrase that is at the heart of the fiduciary duty that continues to govern investment advisers, fiduciary advocates said. Instead, Reg BI should be called “New Suitability,” which refers to the previous broker standard.

“Broker-dealers are designed and built to represent issuers and other sellers,” Knut Rostad, president of the Institute for the Fiduciary Standard, told reporters on a conference call. “Broker-dealers cannot meet a best interest fiduciary standard.”

But that’s what Reg BI implies, Brian Hamburger, chief executive of MarketCounsel Consulting, said on the call. “We have to level with investors, that’s at the crux of all of this.”  

Reg BI was the signature rulemaking of former SEC Chairman Jay Clayton, who said the regulation raised the broker standard well above suitability and strengthened investor protection. The brokerage industry also strongly supports Reg BI, maintaining that it requires substantial changes in the way brokers provide advice and disclose conflicts.

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