“RBI policies and procedures provide no requirements nor offer uniform guidance, and do not define 'mitigation' or 'best interest.' B-Ds have the flexibility to do largely what they like,” the institute said.
“The institute cannot support RBI as proposed. It requires a major reengineering ... to meet the requirements of a real fiduciary standard. We welcome the opportunity to assist the SEC in doing so,” the institute said.
The worst-case scenario, Rostad said, is that the proposal will be adopted as is by the SEC, giving brokers the right to market themselves as acting in investors’ best interests without having to adhere to a fiduciary standard.
"Bottom line is brokers will be liberated to carry a fiduciary-equivalent flag unabashed, in a way they have not been able to before,” he said.