How Financial Advice Should Work
Two tiers of advisor, sorted by education (rather than ethics).
Last month, the SEC released new rules for governing financial advice, in a document artfully entitled, “SEC Proposes to Enhance Protections and Improve Choice for Retail Investors in Their Relationships With Financial Advisors.” (The next 1,000 pages read similarly.) The SEC’s report follows a similar proposal from the Department of Labor, about which I have written in the past.
This time, I will abstain. Even as fiduciary recommendations go, the SEC’s new report is difficult to parse--to the point where even the agency’s commissioners disagree. One, Kara Stein, voted against the proposal, labeling it as “Regulation Status Quo.” A second, Hester Peirce, supported the proposal but stated that it was misnamed. The new standard should not be termed Regulation Best Interest, she said, but instead “Suitability Plus.”