Smith said the investor consensus at the meeting was that the SEC use of the term “best interest” to describe brokers’ standard of care was misleading and confusing, since it implies a fiduciary relationship. “Most people understand fiduciary, but saying someone is acting in your best interest when they may well be acting in their own best interest is just misleading.
“For folks like me who don’t deal with these topics frequently but maybe engage a financial advisor—to use a generic term—once or twice in our lives, it’s critical we understand the legal relationship and all the types of fees,” Smith added.
Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer, said, “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.
“The SEC has rejected the comments of thousands of AARP members who asked for a rule that … shields them from conflicts of interest, hidden fees and other losses that result when financial professionals put their own interests first,” LeaMond added.