FINSUM + Magnifi: Big Changes to Reg BI Likely Delayed by SEC
(March 2021)
One big anxiety that has been on every broker’s mind since mid-January is: is the SEC going to make Reg BI compliance tougher, or introduce something even worse? A lose-lose. Accordingly, there has been a lot of focus on what newly nominated SEC chief Gary Gensler might do to the rule. The Biden administration and the Democratic party have been quite vocal in their desire to replace the rule with a full fiduciary rule, but will that happen, and when? Well, the reality is that the meme stock craziness is likely one of the best things that could have happened to brokers. You may be asking why: because it likely just distracted the new leadership of the SEC for about a year. The meme stock frenzy has dominated headlines and become a Democratic cause, which means newly nominated SEC chief Gensler will likely be focusing on that immediately upon taking over. Bitcoin is another emerging issue given the huge run-up in prices and public focus. Reg BI is obviously very important, but may become second fiddle because of the other, more newsworthy issues.
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FINSUM + Magnifi: Biden Just Let Trump’s Fiduciary Rule Go Into Effect
(February 2021)
In what comes as a surprise to the entire industry, President Biden’s administration has just let the Trump-era version of the Fiduciary Rule go into effect. Almost everyone in wealth management thought Biden would surely use his administration’s powers to stop the rule’s enactment, but they elected to let it go into effect as of this Tuesday, accompanying the announcement with positive and supportive language. The industry’s reaction was immediate and positive, while consumer advocates were disappointed as they were hoping for a more stringent rule from the Democratic administration.
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FINSUM + Magnifi: Why the Election Means the New DOL Rule Is Dead
(October 2020)
For much of the year, the wealth management industry has been concerned about the fiduciary rule. While it is not as onerous as the first version of the rule, it is universally disliked—those who are against a fiduciary concept for brokers dislike it, but so do those who want a uniform fiduciary rule. Well, everybody is likely to be happy then as it is appearing increasingly uncertain whether the new DOL rule will ever come into force. The reason why is simple—the DOL has probably run out of time. According to partner Bradford Campbell at industry-leading law firm Faegre Drinker Biddle & Reath, there just isn’t enough time to do the full rewrite of the rule that the DOL needs to accomplish before the effective November 1st deadline. November 1st is essentially the safe date for the rule, as it needs to be on the books before then to have a good chance of becoming permanent. Speaking about the possibility of Biden becoming president and overturning the rule, “Basically speaking, if a rule has been on the books for more than 60 days, to displace it, you have to do new notice and comment rulemaking," says Campbell.
FINSUM + Magnifi: Watch Out for the New DOL Rule’s Nasty Surprise
(September 2020)
Generally speaking the wealth management industry has been fairly placid about the new fiduciary rule. The current version of the DOL rule is significantly watered down from the then-apocalyptic first version. It is mostly consumer protection groups who are fighting it. However, within the rule is a nasty surprise—for the insurance industry. Independent insurance agents are likely to be very harmed by the rule because they will become de facto fiduciaries, making their role significantly more complicated. Insurance IMOs (independent marketing organizations) will also become very complicated from a regulatory perspective. Ironically, this will likely benefit the wealth management space generally.
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FINSUM + Magnifi: Why the New Fiduciary Rule is a False Victory for Brokers
(September 2020)
There has been a lot of consternation about the new DOL fiduciary rule. Some of it from brokers, more of it from fiduciaries and investor protection groups. What has been much less covered, however, is the insidious rise of state level fiduciary rules that are threatening to create a national patchwork of regulations that could isolate the industry into little islands. Therefore, the introduction last week of a new fiduciary rule for Massachusetts is a big deal. It comes on the heels of nearly a dozen other state fiduciary rule proposals and highlights that many states are unsatisfied with the new federal rule and still want to take matters into their own hands.
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