Here We Go Again

Fiduciary Rule, Take #2

This week, the Securities and Exchange Commission (SEC) voted to create a rule requiring brokers to act in their clients' best interest.

If, after reading that sentence, you said, "But Chuck, didn't the Department of Labor (DOL) enact a similar rule in June of 2017?" you would be correct. Unfortunately, the DOL's rule, which applied only to retirement accounts, was recently struck down in a U.S. circuit court. While the DOL could appeal the ruling, it will probably wait and see what the SEC comes up with.

Back to the SEC's take on the fiduciary rule. Here are some highlights (with my commentary in parentheses):

  • The new rule would apply to both non-retirement and retirement accounts (This makes sense. I never understood why the DOL rule was limited to retirement accounts).
  • Brokers would be required to disclose conflicts of interest such as bonuses or commissions received for selling certain products, but no specific conflicts of interest would actually be banned. For example, financial services companies could still use incentives such as sales contests (Why not get to the root of the problem and ban the incentives?).
  • Brokers and advisors would be required to produce a brochure outlining their legal duties and the fees they charge (I support full transparency, but this will end up being another confusing document that most consumers are unlikely to read).
  • Brokers would be barred from using the title "financial advisor" (I love this...and I'm pretty sure it won't make it into the final rule because the financial services industry will fight hard to kill this provision).

Next Step: Public Comments

The SEC rule entered a 90-day public comment period, which you can read about here. If you feel strongly about this issue, I encourage you to post a comment. Unfortunately, I had to run multiple searches just to find the comment area. Frustrating!

Listening / Reading / Watching

Here's what has my attention right now:

  • Lost in Space on Netflix. I remember watching the original TV series when I was a child. Sadly, the reboot isn't as campy, but it's still fun.
  • Legion on F/X. Season two started a couple weeks ago and I'm happy to report it's still wonderfully weird.