Recently, on December 11, 2019 Senator Warren wrote a letter to the Department of Labor (DOL) to caution them not to permit advisers to provide advice regarding retirement investments because of potential conflicts of interest when the DOL rewrites the fiduciary rules. The previously written fiduciary rule by the DOL was in April 2016 but it was later abandoned stemming from a lawsuit.
Warren has called the Securities and Exchange Commission’s Regulations Best Interest (Reg BI) as being “wholly inadequate.”
Here is what she wrote:
“That would be a costly mistake—those standards not only allow broker/dealers to give clients advice that is not in their best interest, but significantly water down the longstanding fiduciary standards that has protected the clients of the investment advisers for decades.”
Warren further says the following about Reg BI: “is similar to the inadequate FINRA ‘suitability’ standard. Given this ambiguity, it is unlikely that Reg BI will make any significant difference in protecting investors. Reg BI imposes a limited requirement to disclose conflicts. In addition, Reg BI only suggests broker/dealers ‘should consider’ reasonable alternatives for high-priced products, and allows them to still recommend a higher-cost option that pays the broker/dealer more.”
