Skip to Main Content
SUBMIT A TIP RECEIVE DAILY NEWS
Menu AdvisorHub
  • News
      • Latest News
          • DealsHightower Takes Stake in $830 Million New York RIA
          • Business DealCI Financial Buys Chicago RIA and Asset Manager Overseeing $23 Billion
          • Finra signFinra Bars Ex-Merrill Broker Kenahan After Record NH Settlement
          • Female JudgeMorgan Stanley Prevails in TRO Standoff with $6-Mln RBC Team
        • Close
      • Advisor Moves
          • Boca Raton, FloridaRockefeller Lures Two Florida Teams with $9.8 Mln Revenue
          • Morgan Stanley, UBS Advisor movesMorgan Stanley Rehires $3.3-Mln UBS Team in North Carolina
          • Lars Olson of Sanctuary Wealth Partners in Marion, OHSanctuary Hires $435-Mln Merrill Team, Snowden Lures Another from Retirement
          • Stifel Investment CompanyStifel Hires 33-Year Brokerage Vet from Jefferies in Dallas
        • Close
      • Enforcement
          • Advisor MoneyWells Fargo Recoups $2.5 Million from New Jersey Duo
          • Businessman in prison, fraudWells Fargo Claws Back $3 Million from Jailed Ex-Broker
          • Finra signFinra Fines, Supends Ex-Ameriprise Broker Who Flipped ‘A’ Shares
          • Barred from the securities industry.SEC Puts Nail in Ex-Morgan Stanley Broker’s Career Coffin
        • Close
      • Markets
        • `Nothing Safer Than Cash’: Tech Rout Puts Silicon Valley on Edge
        • ‘Any News Is Bad News’ as Earnings Fail to Save Equity Bulls
        • ‘50 Cent’ Profited From Volatility Jump, Wells Fargo Says
        • ‘Beaten Down’ ETF Is a Way to Play Inverted Curve, BofA Says
        • Close
      • Opinion
          • Opinion-How-Will-The-Coronavirus-Affect-The-Stock-Market-Opinion: Coronavirus – What Advisors Need to Know
          • opinion-investors-conquered-fees-next-up-is-their-own-behaviorOpinion: Investors Conquered Fees but Not Their Own Behavior
          • Investor-Confidence-In-Stocks-Rightly-Declines-Opinion-772x485Investor Confidence in Stocks Rightly Declines: Opinion
          • Opinion-Schwabs-Zero-Commission-Decision-Challenges-Its-Ria-ClientsOpinion: Schwab’s Zero Commission Decision Challenges Its RIA Clients
        • Close
      • Fintech News
          • System outageMerrill Systems Hiccuped on Thursday as Stocks Slid
          • 7 dollar rolls‘The Rock’ Invests in Finance App Acorns, and New Users Get $7
          • TraderHigh-Frequency Traders Love Business With Robinhood
          • EtheriumJay Z, Charles Schwab-Backed Ethereum App Opens Doors to Public
        • Close
      • From the Publisher
          • 2021 PredictionsFrom the Publisher: Sirianni’s Predictions for 2021
          • Josh Rogers – 772×485Seven Questions with Tony Sirianni: Josh Rogers, Founder and CEO, Arete Wealth
          • Phil Hildebrandt — 772×485Seven Questions with Tony Sirianni: Phil Hildebrandt, Principal, CEO of Segall Bryant & Hamill
          • Christian Hyldahl, President of Varium Investment Partners-772×485An AdvisorHub Interview with Christian Hyldahl, President of Varium Investment Partners
          • John Peluso – 772×485Timely interview with John Peluso and AdvisorHub CEO Tony Sirianni
          • Louis Dworsky Coronacrash Interview-772×485Coronacrash Update: Hayden Royal’s Louis Dworsky & Tony Sirianni
          • Stratos_Jeff pic.jpg-772×485Coronacrash Update: Stratos Wealth Partners’ Jeff Concepcion & Tony Sirianni
          • coronacrash ben harrison – 772×485Coronacrash Update: BNY Mellon | Pershing’s Ben Harrison & Tony Sirianni
        • Close
    • Close
  • Deals & Comp
  • Recruiting Wire
  • Breakaway Center
  • Resources
    • resources-home-menuResources Home
    • PRACTICE MANAGEMENT RESOURCESPractice Management Resources
    • Transition ResourcesTransition Resources
    • Fintech ResourcesFintech Resources
    • menu fintechFintech Product Directory
    • Menu-Institute-772×485Institute
    • Boutique Wealth AdvisorsBoutique
    • EventsEvents
    • Asset Manager Hub
    • Close
  • AdvisorHub TV
  • Podcasts
  • RIA Center
  • Virtual Summit
close X
April 18, 2018

SEC Proposes ‘Best Interest’ Standard for Brokers and Their Customers

by Jed Horowitz and Mason Braswell
|
News
|
Fiduciary, SEC
|
Comments (2)
Share This
SUBMIT A TIP
SEC Proposes ‘Best Interest’ Standard for Brokers and Their Customers
Rich Clement/Bloomberg via Getty Images

The Securities and Exchange Commission on Wednesday approved a plan to propose  a customer “best interest” standard-of-conduct rule for brokers who make recommendations to retail customers on any securities transaction or strategy.

The proposed “Regulation Best Interest” overshadows the Department of Labor’s fiduciary rule that applies only to retirement account recommendations and that has been sidelined in part by the Trump administration.

But the new proposals were attacked at the SEC’s open meeting by Commissioner Kara Stein for failing to define what “best interest” comprises, for offering vague disclosure requirements that she said will confuse retail investors and for giving broker-dealers an effective safe harbor from litigation.

“The name of the rule, in and of itself, is confusing” said Stein, “and can cause retail investors to reasonably believe that broker-dealers are required to act in their best interests. Perhaps it would be more accurate to call this regulation Regulation Status Quo.”

The proposal does not require the strong fiduciary standard-of-care that is incumbent on investment advisers, she noted, but instead upholds the less rigorous standard that merely requires brokers to ensure that recommendations are “suitable” to a customer’s goals and risk parameters.

It thus does not require financial professional to provide retail customers with the best available investment options, she said before voting against approving the proposals.

Her four fellow commissioners approved putting the package out for comment, although several urged more clarity, particularly regarding disclosure of costs to investors. The disclosure plan would not require broker-dealers to include information to help investors distinguish between the costs to them individually of transactional and advisory accounts, several of them said.

SEC Chairman Jay Clayton defended the proposed regulatory framework as balancing what retail investors expect from their advisors with what securities laws require.

“Our framework is sound,” Clayton said in introducing a discussion of the proposals.

The SEC formally approved proposing two rules and an interpretation to address what it called in a statement “retail investor confusion about the relationships that they have with investment professionals and the harm that may result from that confusion.”  

One part of the package would restrict broker-dealers and their employees from using misleading titles such as financial advisor or adviser when communicating with investors unless they are registered under the federal Advisers Act of 1940.

Another is a proposed interpretation reaffirming, and in some cases clarifying, certain aspects of the fiduciary duty that investment advisers, as opposed to brokers, owe to clients under the fiduciary standard.

The best-interest standard for brokers contains three obligations regarding disclosure, care and conflict-of-interest. Specifically, the regulator would require brokers to:

  • Disclose to retail customers the key facts about the broker-customer relationship, including material conflicts of interest;
  • Understand the product or trading recommendations with enough care and skill to reasonably believe they are in a customer’s best interest; and
  • Identify material conflicts of interest arising from financial incentives and, at a minimum, disclosing and mitigating them. Disclosure of other conflicts of interest also would be required.

The package of rule proposals and interpretations will be put out for a 90-day comment from the public.

Like this article? Let AdvisorHub come to you!  Sign up

Share This
Comments (2)
  • on Apr 18 2018, Launny says:

    Merry go round. Will Sieg backtrack now?

    > Reply to Launny
    • on Apr 19 2018, Fa4life says:

      No, because that won’t help him drive fee based accounts down FA throats and into BACs revenue stream.

      His interpretation of DOL was self serving, to say the least. But hey, he wasn’t the guy in charge then…

      > Reply to Fa4life

Leave a Reply Cancel reply

Tony Sirianni Podcast Banner

CORONACRASH NEWS

  • Finra Scrutinizes Brokers Who Took PPP Loans for Potential Violations

    Finra Scrutinizes Brokers Who Took PPP Loans for Potential Violations

    Jan 25, 2021
  • Merrill Touts Success of Growth Strategy in Pandemic-Afflicted Year

    Merrill Touts Success of Growth Strategy in Pandemic-Afflicted Year

    Jan 19, 2021
  • Raymond James Slashes CEO Pay 17% in Turbulent Year

    Raymond James Slashes CEO Pay 17% in Turbulent Year

    Jan 8, 2021
  • Solomon Sees Vaccine Bringing Goldman Staff Back by End of Year

    Solomon Sees Vaccine Bringing Goldman Staff Back by End of Year

    Jan 5, 2021
  • J.P. Morgan Bank Broker Cleared of Coronavirus Crash Claim

    J.P. Morgan Bank Broker Cleared of Coronavirus Crash Claim

    Dec 4, 2020

NEWS

  • Hightower Takes Stake in $830 Million New York RIA

    Hightower Takes Stake in $830 Million New York RIA

    Jan 26, 2021
  • CI Financial Buys Chicago RIA and Asset Manager Overseeing $23 Billion

    CI Financial Buys Chicago RIA and Asset Manager Overseeing $23 Billion

    Jan 25, 2021
  • Finra Bars Ex-Merrill Broker Kenahan After Record NH Settlement

    Finra Bars Ex-Merrill Broker Kenahan After Record NH Settlement

    Jan 25, 2021
  • Morgan Stanley Prevails in TRO Standoff with $6-Mln RBC Team

    Morgan Stanley Prevails in TRO Standoff with $6-Mln RBC Team

    Jan 25, 2021
  • Thanks, Robinhood, but These Traders Now Want Professional Help

    Thanks, Robinhood, but These Traders Now Want Professional Help

    Jan 25, 2021

FINANCIAL INDUSTRY PODCASTS

AllIndependenceSuccess
The must listen-to podcast for financial advisors by Tony Sirianni. Guests to include:
-Ron Kruszewski
-Shirl Penney
-Penny Pennington
-Eric Clarke
and many more
Michael Kitces and Carl Richards discuss financial advising topics.
Suzanne Siracuse asks the questions nobody else asks, as influencers and interviewer collide in her new and truly unique podcast series The Big Reveal.
The “new advice value stack,” and how firms can use it to help maximize their own value propositions for their clients.
The Brighthouse Financial Insights Panel is a group of leading, independent experts providing powerful insights into the big challenges facing you and your clients.
Equipping independent financial advisors with the tips, insights, and knowledge needed to evolve in every aspect of his or her life
Powering Independence Podcast, insights and ideas for RIAs, presented by Dynasty Financial Partners. A podcast dedicated to presenting fresh ideas and best practices for the wealth management industry.
As an industry expert, Frank LaRosa provides guidance and advice on a host of topics from recruiting and transitions, succession planning, practice management, M&A and more.
Our goal is to unlock the challenges to reveal the opportunities and what it means to provide advice in the 21st century.
Our webcast is dedicated to helping our viewers get real insights by avoiding the cognitive dissonance of today’s media outlets and biased editorial filters.
Go behind the scenes with registered investment advisors and other related independent business model experts
As a nationally recognized recruiter and consultant to financial advisors, Mindy Diamond has unmatched experience in introducing advisors to the independent space.
The must listen-to podcast for investors, venture capitalists and financial advisors, with Tony Sirianni and Paul Dietrich.
An Introduction to Independence: 5 Key Episodes to Jumpstart Your Knowledgebase
Jay is an investment strategist, CERTIFIED FINANCIAL PLANNER™ and business consultant to financial advisors.
In this podcast business owners, entrepreneurs and executives reveal their top tips for success.
We interview top financial advisors and visionary voices to bring you the strategies, tips, and tools you need to make a difference in people’s lives.
A financial literacy and commentary show that features a number of investors, financial experts, professional athletes, business owners and more.
Join Sound Financial Group CEO Paul Adams and President Cory Shepherd every week, as they help you Design and Build a Good Life™.
The Kuderna Podcast, focusing on wealth in it's original meaning- a state of well being.
Timeless wisdom, actionable information you can use right now to make smarter investment decisions.
Made for and dedicated to those folks serious about their financial plan.
Latest News 
Advisor Moves 
Enforcement 
Opinion 
  • About Us
  • Contact Us
  • Advertise
  • Events
  • Careers

 get our newsletter

Industry focused content and breaking news.

SIGN UP

Contact Us

EMAIL US
1707 Post Oak Blvd.
#484
Houston, TX 77056

© 2021 AdvisorHub
  • |Terms of Use
  • |Privacy Policy
  • |Advertise
  • |Careers
  • Facebook
  • Linkedin
  • Twitter

Back to top