SEC BEST INTEREST REGULATION WILL STRENGTHEN CONSUMER PROTECTION

Posted on March 14, 2019

IRI Says Impending Rule Provides Broad Coverage and Strong Enforcement

WASHINGTON, D.C. – Investors will have enhanced protections under wide-ranging proposed U.S. Securities and Exchange Commission (SEC) regulation, which will require financial professionals to act in their clients’ best interest.

(IRI Statement)

A House Financial Services subcommittee will explore the SEC “regulation best interest” proposal at a hearing today.

The Insured Retirement Institute (IRI) supports the SEC effort and favors adoption of a clear, consistent and workable best interest standard that will provide meaningful and effective consumer protections without depriving Americans of access to valuable financial products and services.

“IRI and its members have long supported the principle that financial professionals should be required to act in their clients’ best interest,” said Wayne Chopus, IRI president and CEO. ”IRI has been among the leaders of the financial services industry’s efforts to advocate for adoption of a clear, consistent and workable best interest standard that will provide meaningful and effective consumer protections without depriving Americans of access to valuable financial products and services.”

IRI supports the SEC proposed rule because it will:

  • ▪Provide a solid foundation for an enhanced standard of conduct for financial professional providing investment advice while appropriately preserving investor choice and access to the products and services they need to achieve their financial goals;
  • ▪Preserve the important and valuable distinctions between Broker-Dealers (BDs) and investment advisers (IAs), focusing instead on helping investors understand the differences between BDs and IAs so they can make informed decisions about the type of financial professional that would best meet their needs;
  • ▪Formulate a best interest standard that provides a clear and straight-forward compliance roadmap for firms and financial professionals; and
  • ▪Encourage the development of innovative disclosure techniques to improve the investor experience.

“The SEC’s proposed Reg BI presents a platform to enact a national standard of conduct for Broker-Dealers. With Reg BI, consumers will be able to make informed decisions about the types of financial professionals which will best meet their needs and allow investors greater choice and access to the products and services they require,” Chopus said.

In written comments submitted to the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets, IRI said that the SEC proposed rule reflects the realities of the long—standing relationships between financial advisors and their clients.

“Although IRI and our members believe that the vast majority of Broker-Dealers already act in their clients’ best interest and are intensely committed to helping their clients reach their retirement income objectives, we also understand that many consumers are dubious about seeking out assistance from financial professionals,” IRI wrote. “Therefore, we believe the SEC rule effectively establishes a baseline for all Broker-Dealers to adhere to and provides consumers confidence that their financial professional is working first and foremost on their behalf.”

“With its proposed Reg BI, the SEC is properly taking the lead on this critically important initiative and should move expeditiously to finalize the proposal in collaboration with its fellow regulators to ensure consistency across jurisdictions,” Chopus said. “Instead of making premature judgements about a regulation that isn’t final, we should allow the SEC to complete its rulemaking process to protect investor interests and their ability to seek their choice of professional advice.”

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Contact: Dan Zielinski