In a way, what's surprising is that this is happening now. Normally, when a self-regulating industry pushes through a new set of rules, it's because it's trying to head off a more restrictive set of rules mandated by government. That wasn't an issue here on the federal level. Under President Donald Trump, the industry faces an environment of eased regulation compared with the prior administration.
That may not be the case, however, on the state level. The regulatory rollback has led some states to begin imposing tighter rules. Nevada, for example, requires brokers to function as fiduciaries; Massachusetts is preparing its own fiduciary rule; and New Jersey is setting its own investment-advice standards. Even New York has proposed that sellers of life insurance and annuities act in the best interest of clients.
The brokerage industry, inevitably, is going after these state rules. This tells you all you need to know: Reg BI is less about investor protection than it is about protecting industry profits.
Investor advocates have long wanted one set of rules to apply to both advisers and brokers -- that anyone handling money put investors' interests first, with no ifs, ands, or buts. This new rule offers some window dressing, but it does nothing to move in that direction.
This column was provided by Bloomberg News.