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Better to Have No Rule at All, Reg Bl Critics Say

March 14, 2019 Financial Planning

Some say don't let the perfect be the enemy of the good.

Hard-line fiduciary advocates aren't buying that old chestnut. The SEC's proposal for new broker regulations, if finalized in its current form, would actually be more harmful to investors than no rule at all, witnesses told lawmakers at a House subcommittee hearing on the issue.

That's because, they argue, Regulation Best Interest would allow brokers to advertise that they are required to provide advice in their clients' best interest, but in reality could still engage in the same conflicted and harmful practices that pervade the industry today. According to that line of criticism, the SEC's proposal would effectively codify the current suitability regime and allow brokers to continue to collect excessive commissions and fees, provided they made the requisite disclosures.

The regulations "offer the appearance - but not the reality - of increased investor protection," cautioned Susan MacMichael John, CFP®, chairwoman of the CFP Board's board. 

Read at Financial Planning

Financial Planning
By Kenneth Corbin
March 14, 2019