run in 2020, as could New
York Governor Mario Cuomo.
Massachusetts Senator and
likely presidential contender
Elizabeth Warren has also made
the best interest standard a
centerpiece of her agenda to
reform the financial services
industry.
How the issue plays out
in the states will continue
to be a problem, even if RBI
establishes a standard centered
on disclosure. Considering the
many states that responded
to last year’s court ruling
on the Department of Labor
rule by writing their own
legislation and regulations
mirroring the standards of
conduct and responsibilities
established under the DOL rule,
there’s nothing to stop state
securities administrators from
promulgating more stringent
rules in response to what
they view as a watered-down
standard of care for variable
products.
Standards of care is a
hot-button issue that some
policymakers see as a way
to demonstrate to their
constituencies that they
are “tough on Wall Street”
when the reality is that many
middle-income investors will
find themselves with limited
investment options or having
to pay exorbitant fees for
financial planning services.
This is why consistent outreach
to your state and Federal
legislators is important and
needs to be incorporated into
your routine. If policymakers
don’t learn from you, they
won’t have the information to
make informed and rational
decisions. It’s possible some
of your legislators may have
preconceived notions that
don’t align with the realities
and nuances of complex policy
issues affecting brokerage, but
your efforts to advocate and
educate have the potential
to at least get some of them
to back down rather than
double down on terrible policy
decisions that will have a
severe impact on your ability to
do business.
“ If policymakers don’t learn
from you, they won’t have the
information to make informed
and rational decisions ”
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