Posted on August 7, 2018



WASHINGTON, D.C. -- The Insured Retirement Institute (IRI) urged the Securities and Exchange Commission (SEC) to advance a proposed regulation to require financial professionals to act in their clients’ best interests.

IRI said in comments filed today on the SEC’s Regulation Best Interest (Regulation BI) that the agency’s proposed rule provides “a solid foundation for appropriate enhancements to the standard of conduct for broker-dealers.” The proposal will help investors make informed decisions about the type of financial professional that would best meet their needs while preserving investors’ choice and access to the products and services they need to achieve their financial goals.

In its comments, IRI offered several recommendations to enhance the effectiveness of the SEC’s proposed regulation by providing additional clarity or guidance to help IRI members understand and meet the obligations imposed under the proposal.

Among IRI’s recommendations to the SEC are:

IRI Recommendation:  The SEC should explain that longevity risk and retirement income needs are important topics for financial professionals to consider and discuss with their clients before making recommendations with respect to retirement saving and planning.

“IRI and our members are concerned – and we think the Commission should be as well – that some financial professionals may still not be considering these important factors when making recommendations to their clients. The industry is working in a variety of ways to address this potential gap in the financial advice many Americans are receiving, and we believe this rulemaking provides an opportunity for the Commission to support and contribute to these efforts,” IRI wrote.

IRI Recommendation: The SEC should provide more substantial guidance to help firms identify and evaluate the factors that should be considered when deciding how to manage material conflicts of interest, including the extent to which a conflict would directly impact a financial professional’s behavior.

IRI identified two critical factors to determine whether a material conflict of interest should be managed through disclosure alone or through disclosure plus mitigation.

The first factor is whether a conflict is likely to impact a financial professional’s ability to make recommendations without placing her or his own interests ahead of a client’s interest. The second is whether a conflict can be reasonably mitigated.

“We are encouraged by the SEC’s proposed rule and are eager to continue working with the Commission to develop a standard of conduct consistent with the principle, long supported by IRI and its members, that financial professionals be required to act in their clients’ best interests,” said Cathy Weatherford, IRI president and CEO. “We look forward to a final rule that advances investor protections while providing consumers with access to choices of important retirement products and solutions.”


For an PDF on the letter, click here.