Democratic presumptive presidential candidate Joe Biden likely would torpedo the Securities and Exchange Commission’s Regulation Best Interest — as well as the Labor Department’s new fiduciary rule to align with Reg BI — if elected president, according to his draft party platform.
“Democrats believe that when workers are saving for retirement, the financial advisors they consult should be legally obligated to put their client’s best interests first,” the draft party platform states under the banner Guaranteeing a Secure and Dignified Retirement.
“We will take immediate action to reverse the Trump Administration’s regulations allowing financial advisors to prioritize their self-interest over their clients’ financial well being,” the draft report states in what appears to be a reference to Reg BI.
Barbara Roper, director of investor protection for the Consumer Federation of America, told ThinkAdvisor in an email late Friday that she believes Biden’s draft refers to reversing both Reg BI and Labor’s prohibited transaction exemption as “they go hand in hand.”
The draft of the party platform is worded broadly and does not refer explicitly to either Reg BI or Labor’s PTE. Further clarification on this issue by the Democratic Party was not immediately available as of press time.
Reg BI, which took effect on June 30, requires brokers to put their clients’ ahead of their own, but is not a fiduciary standard. Critics have argued that “best interest” in Reg BI is not defined.
The Labor Department’s prohibited transaction exemption to align with Reg BI is currently under a 30-day comment period, which ends on Aug. 6.