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Advisor Insights

Observations on Regulation Best Interest and the Continuing Fiduciary Wars

Regulation Best Interest is a gift to the brokerage industry, says contributor Scott Simon.

Over the years in this column, I have referred a number of times to the never-ending "Fiduciary Wars" that have raged over the past decade or so. The latest battle in this war took place on June 5, 2019, when the U.S. Securities and Exchange Commission issued Regulation Best Interest. With publication of Regulation Best Interest, the forces of darkness--nonfiduciary broker/dealers and their registered representatives (brokers)--decidedly outmaneuvered and thoroughly defeated the forces of light--fiduciary Registered Investment Advisors and their investment advisor representatives.

It was, of course, not a fair fight from the start. The SEC has a long history of favoring the brokerage industry (and the inherently conflicted suitability standard written by the industry's self-regulatory organization, the National Association of Securities Dealers, which was succeeded in 2007 by the Financial Industry Regulatory Authority over federally registered RIAs--all to the financial detriment of retail investors.