The Securities and Exchange Commission says its new standards of conduct for financial professionals will protect consumers and help investors “make an informed choice of the relationship best suited to their needs and circumstances.” The AARP said it disagrees, however, and that it is “alarmed” by the effort.
“This rule will have a negative impact on the ability of Americans to save and invest for retirement, and we intend to immediately educate our members about its harmful changes,” AARP Executive Vice President and Chief Advocacy and Engagement Officer Nancy LeaMond said Wednesday in a statement.
The SEC’s “Regulation Best Interest” proposal was developed to address concerns that investors lose as much as $17 billion annually due to profit-driven advice from financial advisers and brokers, the AARP said. The compliance deadline for the regulation is June 30, 2020.
The commission said the rule has components meant to address disclosure, care, conflict of interest and compliance issues, and it requires registered investment advisers and broker-dealers to give customers disclosure forms that have information about fees, costs and potential conflicts of interest.
LeaMond, however, said the SEC’s rule weakens the interpretation of the Investment Advisers Act and that by removing related language from the version of the rule that was proposed in 2018 “explicitly rejected” the requirement that advisers put investors’ interests before their own. Other language in the rule is ambiguous and could confuse consumers, the AARP said.
“It is hard enough to save for retirement, and we should do all we can to make sure retirement savers are getting the advice they need,” she said. “Unfortunately, this new rule fails to put investors’ interests first, and AARP stands prepared to continue to fight to protect Americans’ hard-earned savings.”