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DOL, SEC, and Fiduciary: What Does It Mean to Me?

In March of this year, the (DOL) Department of Labor’s long debated and long litigated Fiduciary Rule was terminated. We were pleased to see the topic of fiduciary investment advice brought to the public’s attention.

In April the U.S. Securities and Exchange Commission (SEC) released a proposed rule which would set standards of conduct for both broker-dealers and investment advisers. Brokers would be bound to something known as ‘Regulation Best Interest’ and investment advisers like Roof Advisory Group would have our current standards of conduct reinterpreted.

Although this proposed rulemaking is likely to be associated with the proposed DOL Fiduciary Rule, it is important to consider the SEC rule and its implications:

  • The rule would not make broker-dealer representatives fiduciaries. In fact, the term ‘best interest’ is not even defined in the proposed rule.
  • Even under a ‘best interest’ rule, brokers would continue to receive commissions and other compensation that may pose inherent conflicts of interest.
  • Roof Advisory Group has been a fiduciary advisor since its inception. This rule may serve to enhance our role by clarifying our duties of care and loyalty to our clients. This is the same fiduciary relationship you have always enjoyed.

Over the coming months, we will continue to monitor the proposed rule’s progress and will communicate significant news with you. If you have questions on the concept of a fiduciary or its role in adviser/client relationships, please let us know.