“I expect the SEC to take a more proactive approach about how the conflicts should be mitigated,” Lazaro said. “I also think we are going to see an SEC that is starting to shift what it expects from fiduciaries and begin to enforce fiduciary standards, that is, act in the best interest of your client, full stop."
With new SEC Chairman Gary Gensler at the helm and three Democrat commissioners dominating the five-member commission, Rhoades said the agency should move quickly to rectify these major gaps in fiduciary regulation. “We might have this very narrow window where we have this pro-consumer SEC for the next few years. Maybe this is the time to get things accomplished and hopefully they will not be reversed with the next administration,” Rhoades said.
The fact that Gensler hired long-time investor advocate Barbara Roper as his senior advisor is another clear signal that the agency is serious about addressing costly conflicts, Rhoades added.
Institute for the Fiduciary Standard board members have also been busy lobbying the agency for tougher standards. President and co-founder Knut Rostad said that over the past six weeks the group has “visited with three SEC commissioners and the investor advocate. One nugget from these meetings is the expressed interest to revisit Form CRS or Customer Relationship Summary, a disclosure that is intended to tell investors what services and standard of care they can expect from a financial professional and how they’ll be charged, but not what they’ll pay. The summary has fared poorly in numerous consumer tests.
“I think there is a greater willingness to review Form CRS overall than there is a push to undertake a serious redo of Reg BI,” Rostad said.
The institute has done its own testing on the form and expects to release the results by the end of September, he added.