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DOL Fiduciary Rule
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SIFMA Expects an SEC Best Interest Rule Before DOL Delay Expires

The organization said direct dialogue with the SEC and the agency’s public comments points in that direction.

The Securities Industry and Financial Markets Association said it expects the Securities and Exchange Commission to propose a best interest standard before the full implementation date of U.S. Department of Labor’s fiduciary rule.

In November, the DOL announced an 18-month extension of its fiduciary rule until July 1, 2019 to allow time to complete a review and consider alternatives, as directed by President Donald Trump. Critics said it was an effort by the Trump administration to curtail, or even kill, the rule, which requires advisors to retirement accounts to act in a client’s best interest.

SIFMA represents broker/dealers, banks and asset managers who manage more than $67 trillion in assets for individual and institutional clients, including mutual funds and retirement plans, and contends there should be a rule that sets a standard across both the industry and all accounts.

In October, SIFMA told Nevada securities regulators it should forgo rulemaking that would create a fiduciary rule in the state.

Lisa Kidd Hunt, SIFMA chair and the executive vice president of International Services and Special Business Development at Charles Schwab, said the organization felt encouraged that the SEC is working alongside the DOL.

“The last thing we want to see happen is for them to come up with more, or redundant, or conflicting rules,” SIFMA President and CEO Kenneth Bentsen said Tuesday, during a press conference.

Bentsen also said SIFMA’s confidence in the SEC developing its own rule before the delay expires stemmed from dialogue directly with new SEC Chairman Jay Clayton and U.S. Secretary of Labor Alexander Acosta. But public statements from the agencies claiming it is a priority are just as important, Bentsen said.

The two SIFMA executives also discussed capital markets and other changes in the brokerage industry, including the shrinking number of firms and fee-based compensation.

Hunt said the shift toward fee-based compensation began before the DOL’s fiduciary rule was in place, but that the rule accelerated that movement. Still, she expects commission-based compensation to remain an option.

“I don’t think it’s going to drive the commission business away,” Hunt said. “Clients want that choice and to be able to invest how they want to invest.”

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