The SEC Proposal in Fiduciary Ruling

April 24, 2018

We first wrote about the DOL fiduciary ruling on August 19, 2016, with an update on November 14, 2016, January 12, 2017 and April 18, 2017. Now in 2018, the fiduciary ruling saga continues.


On March 15, the 5th U.S. Circuit Court of Appeals abandoned the DOL’s fiduciary rule in a split decision, overturning the decision of a Dallas district court that was equally adamant in favor of the ruling. The ruling held that the agency exceeded its statutory authority under ERISA to enforce the regulation, which require advisors to act in the best interest of their clients’ retirement accounts.


Following this defeat, on April 18th, 2018 the Securities and Exchange Commission released a 1,000 page set of proposals known as the “best interest proposal” which is meant to limit brokers’ and investment advisors’ conflicts of interest for both non-retirement and retirement accounts.


While the surrounding commentary suggests that it is a win for broker-dealer associations in failing to institute a fiduciary requirement on broker-dealers (not to mention that it does not define “best interest” in the entirety of the 1,000 page proposal),  it does require them to “make clear to the investing public that their brokers are salespeople who do not offer continuing advice or account maintenance and are not trusted fiduciary advisors.” The SEC proposes it will prohibit broker-dealers from using “advisor” or “adviser” as a title.


Overall, the proposed SEC rule broadens the scope of original DOL fiduciary ruling, stipulating that advice for both retirement and non-retirement accounts be held to a fiduciary standard. However, it is unknown how the agency intends to regulate. Furthermore, there is a 90 day period for review and comment on the proposal, so changes may occur.


Despite the back and forth on this will-they-or-won’t-they-regulate question, there is an undeniable shift occurring in the financial industry. Firms are making their way into advisor space, preferring the revenue stability of recurring fees to the one-off commission sales of the broker-dealer model.


Not to mention that all of this has raised awareness of the fiduciary responsibility of financial planning, wealth management, retirement planning, and investment management professionals among the investing public.

TABER Asset Management is an investment management and financial planning firm located in Des Moines, IA. We provide fiduciary based investment advisory services to clients all across the U.S. Please contact invest@taberasset.com or call us at 515-557-1860 to learn more about how we may serve you.

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