Advocacy in action blog

SEC Chairman Jay Clayton issued a statement June 15 reminding financial firms and advisors of the new, enhanced conduct standards found in Regulation Best Interest. Reg BI requires broker-dealers and their representatives to act in the best interest of their clients when making recommendations, and to not put the firm’s or representatives’s financial interests ahead of the consumer’s.

Registered index-linked annuity (RILA) products offer a good option for some consumers who want to benefit from market growth while reducing their exposure to market losses. These are long-term, tax-deferred investments that are often well-suited for investors who are preparing for retirement, especially those who are retired or are nearing retirement and wish to reduce the impact of market downturns.

In recently updated Frequently Asked Questions (FAQs) on its new Regulation Best Interest (Reg BI), the SEC offered some clarification on when it would be permissible for broker-dealers and their registered representatives to use the terms “advisor” and/or “adviser” as part of their name or title once Reg BI goes into effect on June 30, 2020.  The SEC, in Reg BI, did not specifically prohibit the use of these terms by broker-dealers and their reps, and the FAQs indicate that a broker-dealer can use these terms when acting as a municipal advisor, a commodity trading advisor or “in a role specifically defined by federal statute”.

NAIFA supports a rule proposed by the Department of Labor that would expand the ability of retirement plan sponsors to provide participants with required disclosures and notices electronically. In a letter to Russ Vought, acting director of the Office of Management and Budget, NAIFA and partner organizations urge the administration to finalize the rule as quickly as possible.

In light of the disruptions to normal business operations brought about by efforts to curtail the spread of the Coronavirus, the U.S. Securities and Exchange Commission (SEC) is considering a possible delay in the June 30, 2020 implementation/effective date for compliance with the Commission’s new Regulation Best Interest, which establishes a heightened “best interest” standard of care for broker-dealers and their registered representatives. (In a related matter, the SEC has changed the deadline for BD firms to file their Forms ADV from March 30, 2020 to June 30, 2020.) Although no final decision has been made, the topic has been discussed by SEC leadership. NAIFA has submitted a letter to the SEC requesting a reasonable delay in the Reg BI implementation/effective date, which you can review here.