Category: SEC


Best Interest and Best Practices #11

Posted on December 11, 2018, by Fred Reish in best interest, fiduciary, prudent, SEC. Comments Off on Best Interest and Best Practices #11

What Does Best Interest Mean…In the Real World? (Part 3)

This is the 11th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

In my last two posts (Bests #9 and #10), I discussed the definition of the Best Interest standard of care, with a particular focus on the duty to exercise care, skill, prudence and diligence in developing recommendations for investors. Those articles commented on the consistency in the Best Interest and fiduciary standards being developed by the SEC and several states (including New York), as well ERISA’s duty of care and duty of loyalty.

Bests #9 discussed the similarities of the standards of care and Bests … Read More »

Share

Best Interest and Best Practices #10

Posted on November 28, 2018, by Fred Reish in best interest, Reg BI, Registered Investment Advisers, RIA, SEC. Comments Off on Best Interest and Best Practices #10

What Does Best Interest Mean . . . In the Real World? (Part 2)

This is the 10th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

My last article, Bests #9, discussed different definitions of a “best interest” standard of care. The point of that article is that, while there may be slight differences in the wording, the rules converge to require that an advisor (and the advisor’s supervisory entity) act with care, skill, diligence and prudence to make recommendations that are in the best interest of the investor. This article discusses how the standard applies to specific circumstances.

As background, there are three parts to any … Read More »

Share

Best Interest and Best Practices #9

Posted on November 13, 2018, by Fred Reish in 401(k), 403(b), best interest, DOL Activity, prudent, Reg BI, Registered Investment Advisers, RIA, SEC. Comments Off on Best Interest and Best Practices #9

What Does “Best Interest” Mean? (Part 1)

This is the 9th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

“Best Interest” has become part of the American lexicon . . . as an aspirational goal or a demanding standard—depending on the point of view. But, what does best interest mean? It may mean different things to different people . . . and perhaps even to different regulators. However, I believe that most people would agree on the definition in this article.

As I read the guidance issued by the Department of Labor (DOL), the Securities and Exchange Commission (SEC), and New York State, there are actually … Read More »

Share

Best Interest and Best Practices #7

Posted on October 30, 2018, by Fred Reish in 401(k), 403(b), DOL Activity, Reg BI, Registered Investment Advisers, RIA, SEC. Comments Off on Best Interest and Best Practices #7

SEC Best Interests . . . When? And What About the DOL

This is the 7th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

The Regulatory Agendas for the SEC and DOL were recently issued. Both have plans for guidance by September of 2019, but the anticipated timing of the guidance has, by and large, been misinterpreted. To understand what I mean, read on.

The SEC’s Agenda said that Final Action on the Regulation Best Interest proposal for broker-dealers and the Interpretation of Standard of Conduct for investment advisers would be “09/00/2019.”

Similarly, the Department of Labor Agenda said that there would be a final rule on … Read More »

Share

Best Interest and Best Practices: Improving Retirement Outcomes #2

Posted on September 19, 2018, by Fred Reish in best interest, DOL Activity, FINRA, prudent, Reg BI, SEC. Comments Off on Best Interest and Best Practices: Improving Retirement Outcomes #2

This is the second of a new series of articles titled “The Bests.” This series focuses on Best Interest and Best Practices. Those topics will give me flexibility to talk about a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) committees.

In my last post, I discuss the remarkable similarities among the SEC’s proposed Regulation Best Interest, the SEC’s proposed Interpretation for investment advisors, the DOL’s Best Interest standard of care (which is a combination of ERISA’s prudent man rule and duty of loyalty), and the New York State Best Interest standard for sales of annuities and insurance products. All of those rules require that advisors act with care, skill, prudence and diligence, and that they place the interests of the investor ahead of their own.

In the first post, I conclude that the Best … Read More »

Share

Best Interest and Best Practices: Improving Retirement Outcomes #1

Posted on September 12, 2018, by Fred Reish in best interest, BICE, prudent, SEC. Comments Off on Best Interest and Best Practices: Improving Retirement Outcomes #1

What is the “Best Interest?”

This is the first of a new series of articles titled “The Bests.” This series will focus on Best Interest and Best Practices. Those topics will give me flexibility to talk about a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) committees.

For this inaugural article, let’s talk about the meaning of “Best Interest.”

There are at least four Best Interest standards. (While “best interest” can also refer to management of conflicts of interest, this article is about the best interest standard of care.)

ERISA’s best interest standard of care for plan sponsors and fiduciary advisors for private sector retirement plans. (While ERISA doesn’t literally have a best interest standard—because the Best Interest Contract Exemption was vacated by the 5th Circuit Court of Appeals, that best interest standard was a combination of … Read More »

Share

Moving from Angles to Bests

Posted on August 15, 2018, by Fred Reish in announcement, Broker-Dealers, DOL Activity, prudent, Registered Investment Advisers, RIA, SEC. Comments Off on Moving from Angles to Bests

Now that I have completed 100 articles about interesting Angles on birth –and death–of the DOL’s Fiduciary Rule, and the birth of an SEC best interest standard for broker-dealers and RIAs, I am going to start on a new series. The new series, rather than being titled “Angles,” will be called “The Bests.”

So, from now on, my articles—maybe the next 100—will focus on two “bests”—the SEC’s best interest standard and best practices for advisors and plan sponsors.

I figure that the SEC’s best interest rules will be developed and implemented over the next year or two, giving me a wealth of materials for new articles. But, I don’t want to be limited to that. I think that it’s important to talk about best practices for retirement plans and retiree investing and withdrawing, with a focus on helping participants to and through … Read More »

Share

Interesting Angles on the DOL’s Fiduciary Rule #100

Posted on August 6, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, FINRA, Registered Investment Advisers, RIA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #100

Investment Advisers and the SEC’s Interpretation of Their Duties: Part II

This is my 100th article about interesting observations—or “angles”—concerning the Department of Labor’s Fiduciary Rule and the SEC’s “best interest” proposals.

Part I of this post discussed the application of the SEC’s best interest standard to recommendations to participants to take distributions and rollover to IRAs. It also discussed the apparent requirement for a thoughtful and professional process to develop the recommendation. However, it reserved for this post, Part II, the factors to be considered in that process.

The RIA Interpretation lists a number of factors to consider in the best interest process. However, most of them apply to investment recommendations, rather than advice about distributions. But a few are helpful. For example, the costs of investments and services and consideration of the investor profile are relevant factors.

Under Reg BI, though, the … Read More »

Share

Interesting Angles on the DOL’s Fiduciary Rule #99

Posted on August 1, 2018, by Fred Reish in Broker-Dealers, DOL Activity, Registered Investment Advisers, RIA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #99

Investment Advisers and the SEC’s Interpretation of Their Duties: Part I

This is my 99th article about interesting observations concerning the Department of Labor’s (DOL) Fiduciary Rule and the SEC’s “best interest” proposals.

The SEC labeled its interpretation of the standard of care for RIAs (the “RIA Interpretation”) as a proposal. However, in that proposal, the SEC explained that the RIA Interpretation was based on the SEC’s current understanding of the duties of investment advisers. More specifically, the SEC described the RIA Interpretation as reaffirming and clarifying the RIA fiduciary rule: “. . . we believe it would be appropriate and beneficial to address in one release and reaffirm—and in some cases clarify—certain aspects of the fiduciary duty that an investment adviser owes to its clients under section 206 of the Advisers Act.”

As a result, investment advisers should treat the RIA Interpretation … Read More »

Share

Interesting Angles on the DOL’s Fiduciary Rule #98

Posted on July 16, 2018, by Fred Reish in Broker-Dealers, DOL Activity, prudent, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #98

Regulation Best Interest: Consideration of Cost and Compensation

This is my 98th article about interesting observations concerning the Department of Labor’s fiduciary rule and the SEC’s “best interest” proposals.

The SEC’s Regulation Best Interest (Reg BI) proposes a number of major changes to the governance of broker-dealers. For example, it imposes a best interest standard of care on recommendations of securities transactions and it requires that material conflicts of interest involving financial incentives be eliminated or, alternatively, disclosed and mitigated. Based on the SEC’s examples of mitigation, it appears “real” mitigation is expected and not just existing practices with more disclosure.

There are other significant changes. For example, there is an increased focus on the costs and compensation related to recommended securities transactions and investment strategies. The SEC’s discussion explains that:

“[O]ur proposed interpretation of the Care Obligation would make the cost … Read More »

Share



Recent Insights

Best Interest and Best Practices #11

What Does Best Interest Mean…In the Real World? (Part 3)

This is the 11th of a new series of articles titled “The Bests.” The series...

Best Interest and Best Practices #10

What Does Best Interest Mean . . . In the Real World? (Part 2)

This is the 10th of a new series of articles titled “The...

Best Interest and Best Practices #9

What Does “Best Interest” Mean? (Part 1)

This is the 9th of a new series of articles titled “The Bests.” The series focuses on Best...