The Department of Labor’s fiduciary rule has been invalidated, but other regulators are pushing forward with their own similar rules, including the Securities and Exchange Commission (SEC), certain states (such as New York), the National Association of Insurance Commissioners, and the Certified Financial Planning Board.
The SEC released its own comprehensive proposal in April 2018, shortly after the Fifth Circuit Court of Appeals voided, or “vacated,” the DOL fiduciary rule.
The Department of Labor’s (DOL) now-defunct fiduciary rule sparked widespread governmental interest in the standards of conduct that apply
to advice regarding financial matters. For a number of years, SEC had
considered whether to issue regulations that would increase the standard of
conduct applicable to investment advisers and broker-dealers. The SEC
finally released its own comprehensive proposal in April 2018, just weeks after the Fifth Circuit Court of Appeals voided, or “vacated,” the DOL fiduciary rule.
Under the SEC’s proposal, a broker-dealer must act in the “best interest” of a retail customer at the time a recommendation is made without placing the broker-dealer’s interests ahead of the customer’s interests. Unlike the DOL’s fiduciary rule, there is no requirement for the broker-dealer to disregard its own interest. Comments on the SEC’s proposal were due in August, leaving stakeholders to wait and see what the final rule package looks like.
Student Loans vs Retirement Savings: IRS Rules Support Employers Addressing the Contribution Clash
State-based Retirement Savings Plans Gain Traction
How CITs Can Reduce a DC Plans Tax Burden
Defined Contribution Retirement Policy Pulse
A number of state governments are also taking action to impose a fiduciary or “best interest” requirement on certain financial professionals. For example, in July 2018, the New York State Department of Financial Services finalized regulations that newly impose a best interest standard on insurers and insurance producers in connection with any transaction or ecommendation involving a proposed or in-force life insurance policy or
annuity. Although employer retirement and life insurance plans are exempt, the New York rule is otherwise very broad. And, just in September, New Jersey Governor Phil Murphy announced that the state will be issuing rules that will impose a fiduciary duty on all New Jersey investment professionals.
Related efforts are also underway by the National Association of Insurance Commissioners (NAIC), which is considering whether to include a best interest or consumer-focused standard of conduct in its model regulation on annuity transactions. In addition, the Certified Financial Planner (CFP) Board of Standards will, beginning October 1, 2019, require CFP rofessionals to act as a fiduciary under a broader set of circumstances than what they are required to do today.
The views expressed in this material are the views of SSGA Defined Contribution as at 05 November 2018, and are subject to change based on market and other conditions.
This document contains certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. Investing involves risk, including the risk of loss of principal. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
Diversification does not ensure a profit or guarantee against loss.
This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.
Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.
Images of NYSE Group, Inc. are used with permission of NYSE Group, Inc. Neither NYSE Group, Inc. nor its affiliated companies sponsor, approve of or endorse the contents of this program. Neither NYSE Group, Inc. nor its affiliated companies recommend or make any representation as to possible benefits from any securities or investments.