August 6, 2018
The proposed "Regulation Best Interest" rule for broker-dealers will further confuse the public. I oppose the rule for a number of reasons.
As a Certified Financial Planner(TM) and Registered Investment Advisor in the State of California, I adhere to a fiduciary standard of care in the advice I offer to my clients. In this regard, I aim to offer advice in the utmost good faith in a manner I believe to be in my client's best interest.
I believe the proposed regulation best interest rule will confuse the public with regard to the different between a fiduciary standard and a vague understanding of what may or may not be in a client's best interest. The Investment Advisers Act of 1940 already delineates between investment advisors and broker-dealers. The proposed rule change appears to violate the "solely incidental" exception within the Act that allows broker-dealers a narrow scope within with to offer advice without being registered and would require a best interest regulation that may be difficult to adhere to within the context of many broker-dealer compensation models.
I do not believe that the broker-dealer model is a "model for advice". Rather, it is first and foremost a sales model. Broker-dealers are selling products. Investment advisors are offering advice for compensation. These are two different models. Each is valid, but the language put forth in the current "Regulation Best Interest" rule appears to create a false equivalency between the two.