Best Interest Standard

SIFMA strongly supports enhancing investor protections by establishing a heightened and more stringent broker-dealer best interest standard. The SEC should establish such a uniform best interest of the customer standard.

Since early 2009, SIFMA has consistently advocated for the establishment of a uniform best interest standard for financial professionals when providing retirement advice. We continue to support such a standard under the industry’s primary regulator, the U.S. Securities and Exchange Commission (SEC). Specifically, the standard should:

  • Apply the best interest standard across all securities recommendations made to retail customers in all broker-dealer accounts, not just to IRA accounts.
  • Fit the best interest standard within the existing and long-standing securities regulatory regime for broker-dealers.
  • Require rigorous examination, oversight, and enforcement by the SEC, FINRA and state securities regulators.

On Wednesday, April 18, the SEC voted 4-1 to propose Regulation Best Interest. Reg BI would require broker-dealers to act in the best interest of their retail customers when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. The SEC also proposed a Form CRS Relationship Summary and interpretive guidance for Broker-Dealers and Investment Advisers and an interpretation regarding the standard of conduct for Investment Advisers.

“SIFMA has long supported the creation of a heightened best interest standard for broker-dealers across all accounts that builds upon the existing, robust, broker-dealer regulatory regime. We commend the SEC for proposing a new best interest standard that would protect retail investors while preserving retail investor choice,” said SIFMA President and CEO Kenneth E. Bentsen, Jr. in a statement. “We urge the SEC to promptly evaluate, and as appropriate, incorporate the legal analysis, data and commentary received during the comment period and swiftly proceed to final rulemaking.”

The DOL Fiduciary Rule

Together with the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Greater Irving-Las Colinas Chamber of Commerce, Insured Retirement Institute, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce and Texas Association of Business, SIFMA filed a legal challenge to the Department of Labor’s fiduciary standard of conduct rule for brokers and registered investment advisors serving people with Individual Retirement Accounts (IRAs) and 401(k) plans. On March 15, 2018, the U.S. Court of Appeals for the Fifth Circuit, in a 2-1 decision, ruled to strike down the Department of Labor’s fiduciary rule in its entirety, preserving access to affordable financial advice.

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