The former SEC chief economists also questioned the proposal’s heavy reliance on requiring advisors to disclose “material” conflicts of interest that may impact retail advice.
“[W]e are unaware of any requirement that an adviser provide a single, easy-to-digest periodic report summarizing the retail customer’s actual cost of managing her funds. Moreover, we are aware of no evidence that disclosures enable retail customers to understand the implications for their own welfare,” the economists said.
“So a critical question remains unaddressed in the EA: Will the required new disclosures meaningfully inform customers? We feel (preliminarily) that the new CRS forms would provide some helpful information. But we would far prefer for there to be evidence that the intended targets of these disclosures feel the same,” the SEC economists wrote.
The economists' comment letter can be viewed here.