Welcome back to Human Capital. I’m Melanie Waddell in Washington, bringing you the latest on the people shaping the financial services regulatory realm. We’re focusing this week on the host of players weighing in — and promising action — on the Securities and Exchange Commission’s just-approved Regulation Best Interest and the agency’s advice-standards package.
On Wednesday, the agency passed Reg BI by a by a 3-1 vote, along with a new customer relationship summary (Form CRS), fiduciary standards for advisors and a new interpretation of “solely incidental” advice.
Barbara Roper, director of investor protection for the Consumer Federation of America, argues the new rules are “a huge wasted opportunity.” Beyond “educating investors to find advisors who are willing to adhere to a higher standard than the SEC rules impose,” Roper told Human Capital that the consumer group will be “laying the groundwork for reopening the [Reg BI] rule in a new administration.”
But Ed Mills, policy analyst for Raymond James, argues that while a change in administration “could lead to some parts” of Reg BI being reopened, “the existence of the rule will provide the industry with an ability to argue that the [fiduciary] issue has been addressed, likely preventing a large-scale reworking of the rule.”
Keep scrolling for more opinions on the agency’s new rules.
While folks are busy sizing up the “good, bad and ugly” of Reg BI, advisors registered with the SEC need to focus on the new Form CRS requirements, advises GJ King, president of RIA in a Box, calling the new form “the first new significant regulatory filing requirement to impact RIA firms in a decade.”
King wants RIAs to grasp that the new form will require them to create “a new disclosure document, which will become the firm’s primary facing prospect and client disclosure document.”
King says Form CRS is a “step in the right direction” but “is less prescriptive than originally proposed and thus may require RIA firms to devote more significant time and resources to ensure they craft the proper plain English language specific to their firm.”