Now that the Department of Labor’s fiduciary rule has been issued, the Center for Financial Responsibility at Texas Tech University is seeking to define the term “best interest.”
To that end, it has launched the “Best Interest Initiative,” which is focused on answering a question faced by financial advisors as they work to understand just what acting in the best interest of their clients truly means.
Although they may not be sure what a fiduciary is, consumers have shown themselves to be very much in favor of a legal requirement for advisors to act in the client’s best interest; the financial industry, not so much — at least not as it’s presented in the DOL’s new rule. Some groups within the industry support the standard more than others.
“No one has defined best interest,” John Gilliam, Ph.D., associate professor in the Department of Personal Financial Planning at Texas Tech, said in a statement.
Gilliam continued, “The Department of Labor rule uses the term but doesn’t specify what the terms mean.” The Center said that Texas Tech’s personal financial planning program, “regarded as one of the key academic thought leaders in the industry,” is “a natural fit” to undertake research on the subject. Gilliam added that he believes such research will be vital to protect consumers and help the industry become stronger.
The “Best Interest Initiative” initiative, according to the Center, will allow Texas Tech University researchers in the Department of Personal Financial Planning to study what best interest means, how advisers can practice under these rules, and begin to help the industry formulate and define “best practices” under these important new parameters on financial advisors.
The Center is also seeking strategic partners “interested in meaningful research that will explore the parameters of the ‘Best Interest’ rule.”