The Securities and Exchange Commission’s Office of Management and Budget says to expect the notice of proposed rulemaking for the Personalized Investment Advice Standard of Conduct in October 2016. The SEC’s fiduciary standard rule has been anticipated ever since 2010 when the Dodd-Frank Act gave the regulator the authority to proceed with such a rule.
A new fiduciary rule would mandate that both advisers and brokers who give financial advice do so in their clients’ best interests. Now that the proposed rule isn’t expected for nearly another year, the SEC will be able to see what happens with the Department of Labor’s own proposed fiduciary rule, which is expected to be finalized early in 2016.
The DOL’s rule includes a best-interest standard for advice given to individual retirement accounts and 401(k) accounts. However, there are those who oppose the DOL rule, contending that it will substantially up liability risks and regulatory expenses for brokers, while making the giving and getting of investment advice much more costly. Bipartisan lawmakers have even initiated efforts to create a bill that would take the place of the DOL rule. Meantime, there are opponents of the rule seeking to include a rider on an upcoming appropriations bill that would prevent the Labor Department from getting the funding to put such measures into effect.
Supporters of the rule say that retirees and workers would gain protections from investments that come with high-fees that end up eating away at investors’ savings.
The SEEK Partners Group is a securities fraud law firm.
SEC’s fiduciary standard expected in October 2016, InvestmentNews, November 23, 2015
DOL Fiduciary Standard Resource Center, SIFMA