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Regulation and Compliance > Federal Regulation > SEC

SEC Best-Interest Proposals Generating Less Advisor Awareness Than DOL Fiduciary Rule Did: Survey

By Marlene Satter

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Advisors are less aware of the Securities and Exchange Commission’s best-interest proposals now than they were of the Labor Department’s fiduciary rule proposal in 2016.

So says Fidelity research, which also finds that not only do 40% of advisors aware of the proposals not plan on acting until there is further clarification, some 78% of advisors say they’ll need at least some help assessing and evaluating the proposals.

Opinion is pretty evenly divided on whether the proposals will have a positive or negative impact, with a third of advisors on either side and the remaining third in the middle on the matter. And while 62% of advisors expect that a new SEC rule for standards of conduct will be put in place, their efforts to prepare for the now-defunct Labor rule have put them at an advantage.

In fact, advisors are likely to leverage a number of the steps they already took to work toward compliance with the Labor rule, and they expect to be able to use several of them to better prepare for future SEC regs.

The top five solutions likely to prove useful in complying with the SEC’s standards, Fidelity found, included tools and technology to ensure the firm’s compliance and control. Investment products based on the standard of care will also make it easier to stay within the straight and narrow, as will custom forms or disclosures to demonstrate the firm’s, and advisors’, standard of care of the client.

Tools and technology that can ensure the firm’s pursuit of the client’s best interest and account identifiers that indicate the standard of care for investor accounts will also make it easier to comply with new SEC requirements.

Fidelity points out that there’s still quite a bit of ambiguity in the SEC’s proposals, which provides “an opportunity to stay actively informed and engaged,” and suggests that as firms evaluate just where they fit in within a still-evolving industry, they take a look at areas that present a high risk of noncompliance to see how technology could mitigate those risks.

Marlene Satter

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