While Schweiss said it is time that the SEC address confusion surrounding "incidental advice," he added, “I, like many in the industry, was surprised to see it show up on the agenda.”
From a competitive perspective, while some in the advisory industry have cried foul regarding the SEC allowing brokers to blur the fiduciary line, Deringer said that at the end of the day, registered investment advisors will still be the only fiduciaries in a room.
“To the extent that a fiduciary label is used as an advantage, will this change that? The SEC’s rule for brokers is less than a true fiduciary standard, so does it truly put brokers in a higher place than advisors? No. Could brokers use the term ‘best interest” to create that perception? Sure, I guess they could,” he said.
Will Reg BI help or hurt investors overall?
“I think it does raise the bar,” Schweiss continued. “I think it raises the bar in terms of the standard of care that brokers owe their customers.”
Deringer also sees a positive impact. “Do investors win? These types of proposals require firms to take a hard look at what they’re doing and bring consistency to practices," he said. "I’m not sure this rule causes investors to win, but these types of looks at fiduciary relationships probably as a whole are beneficial to investors."