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Sen. Warren Spars with SEC Chief on Fiduciary Rule Status
ThinkAdvisor; February 6, 2018
Sen. Elizabeth Warren, D-Mass., used a Tuesday Senate Banking Committee hearing on oversight of the cryptocurrency market to take Securities and Exchange Commission chief Jay Clayton to task over the agency’s upcoming fiduciary rule proposal.
Here’s their exchange...
Warren: “Can you state to this committee that any rulemaking you do on this topic will not weaken existing protections for retirement savers?”
Clayton: “From what baseline?”
Warren: “We have a rule from the Labor Department; you could strengthen the rule, you could pass the same rule or you could weaken the rule. I want to know that you’re not going to weaken the rule — that’s all I’m asking you.”
Clayton: “Here’s what I’m trying to do: The relationship between an investment advisor, broker-dealer and their client … — they have a 401(k), they have an annuity, and they have a few stocks — is regulated … by no less than five people. And they all have different standards. My main objective is to bring clarity to that without jeopardizing investor protection.”
Rollovers Present a Biggest Risk during the DOL Transition
Financial Advisor; February 7, 2018
As the transition period continues for implementation of the DOL’s fiduciary rule, advisors must carefully pay attention to how they assist investors with rollovers if they don’t want to wind up in a regulatory snafu.
“Rollovers are probably the area that will be scrutinized the most,” said Jason Roberts, the founder and CEO of the Pension Resource Institute. Roberts, also the founder and managing partner of the Retirement Law Group, made the remarks during a recent webinar.
Three regulators—Finra, the Securities and Exchange Commission and the Department of Labor—are currently looking at rollover transactions, noted Roberts. If advisors take steps and have a process in place to comply with the DOL requirements, which are the most stringent, he said, “You don’t have to look over your shoulder and wonder whether it would satisfy a different regulator.”
SEC exam priorities target fee disclosures to retail investors
InvestmentNews; Feb 7, 2018 @ 10:48 am
Now would be a good time for investment advisers to review the fees they're charging clients and how they're telling clients about them.
In its 2018 exam priorities list released Wednesday, the Securities and Exchange Commission said it will target potential investor harm that arises from financial advisers charging excessive fees and failing to disclose them.
"If I were a registered investment adviser today ... I would go back and look at all my disclosures for consistency and accuracy," said Amy Lynch, president of FrontLine Compliance.
She recommends advisers go through each account; take note of the management fees, revenue sharing and other charges; and see if they're fully explained.
A focus on fees and disclosures is a staple of SEC exam priority letters, but this year there is a special emphasis right at the top.
"This year, we will continue to prioritize our commitment to protect retail investors, including seniors and those saving for retirement," the SEC Office of Compliance Inspections and Examinations wrote. "We will be especially looking closely at products and services offered to retail investors, as well as the disclosures they receive about those investments."
How fees are determined and disclosed will be at the heart of examinations.
Massachusetts Floats Fee Table Requirement for Advisors
ThinkAdvisor; February 7, 2018
The Massachusetts Securities Division wants advisors registered in the state to provide feedback on a proposed rule requiring them to create a fee table for their clients.
“It is not uncommon today for consumers to pay different types of fees for advisory services, including retainer fees, subscription fees, or third-party robo-advisor fees,” said Commonwealth Secretary William Galvin, the state's top securities regulator, in a Wednesday statement.
The proposed fee table is designed to increase transparency, aid comprehension of advisory fees, and enable investors to comparison-shop for an advisor.
“It is no longer the case that advisors only charge their clients a fee for assets under management,” Galvin said. “Recent changes that have occurred in the financial services industry, many fueled by fintech innovations, have resulted in an evolving fee structure for investment advisors.”