This article was published in the NAPFA Advisor Magazine.
The U.S. economy and financial markets have entered a period of heightened uncertainty, posing fresh challenges for investors. Inflation is up sharply, a possible recession looms, and the securities markets are exhibiting significant volatility while venturing into bear territory. Commodity prices are also experiencing huge price swings. Add to this backdrop the financial industry’s never-ending stream of complex new investment offerings and inducements, from digital engagement practices to SPACs to cryptocurrencies, and it’s clear that investors face major risks.
In these times, strong financial regulation is more important than ever, so that markets can remain stable while under stress, opportunistic scam artists—who thrive on investor anxiety—are kept at bay, and investors can rely on objective, conflict-free advice. Retirement savers are especially vulnerable to the current economic and market conditions, not to mention predators, and they desperately need sound investment advice.
To provide context for today’s turbulent conditions, let’s remember the state of play with respect to the “best interest” rules aimed at ensuring that retail investors receive sound, conflict-free advice from their advisors. In sum, the SEC is relying on guidance and enforcement to fortify the anemic provisions in Regulation “Best Interest” (Reg BI)—I’ve deliberately put quotation marks around…
