A uniform fiduciary rule issued by the Securities and Exchange Commission should include a “two-tier client disclosure regime” as an alternative to the best-interest contract exemption set out in the Labor Department’s fiduciary rule, the Financial Services Institute told the securities regulator Monday.
David Bellaire, FSI’s general counsel, told the SEC in FSI’s comment letter that a two-tier client disclosure regime should consist of a “concise point-of-sale disclosure document at the time a formal engagement is entered into for new accounts that would be supplemented with more detailed disclosures posted to the financial institution’s website.”
The SEC started taking comments on the development of a fiduciary rule of its own in June.
Bellaire stated that the first-tier disclosure “will serve to inform investors of the information that is most critical to their decision making at the point in time when that information is most useful and can be delivered most efficiently.”
These disclosures, he said, would “ensure that customers understand the best interest standard of care owed to them by the financial institution and the financial advisor.”
For instance, the information provided on the first-tier disclosure may include:
• A statement of the best-interest standard of care owed by the financial institution to the client;