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August 7, 2018

SEC’s Investment Advice Rule Needs An Overhaul


Tuesday, August 07, 2018

Contact: Nick Jacobs, 202-618-6430 or

SEC’s Investment Advice Rule Needs An Overhaul

Washington, D.C. – Stephen W. Hall, Legal Director and Securities Specialist for Better Markets, issued this statement following submission of Better Markets’ comment letter on the Securities and Exchange Commission’s (SEC) investment advice rule proposals:

“Every American expects and deserves at least one thing from their broker:  financial advice that is in their best interest.  But that’s not what usually happens.  Instead, for far too long brokers have been allowed to recommend investments that pad their wallets with commissions and fees while saddling their clients with over-priced, underperforming products that cost tens of billions of dollars a year in lost savings.  These conflicts of interest have dominated the broker business model for decades.

“Three months ago, the SEC finally proposed a rule that it said would solve the problem.  Unfortunately, after a thorough analysis, we now know that the rule is almost worthless.  In our comment letter filed today, we outline the long list of defects in the rule and urge the SEC to overhaul it.  It must be rewritten to create a genuine best interest standard that forces brokers to act in their clients’ best interest at all times.  And it must require not only better disclosure, but also an affirmative duty to completely eliminate the worst conflicts of interest like sales contests and bonuses that create irresistible urges among brokers to foist lousy investments onto their clients.  A strong rule is what the law actually requires, and it’s also what the SEC was set up to do:  protect investors from fraud, abuse, and conflicts of interest.

“If the SEC doesn’t fundamentally change the rule, then it will be business as usual—and maybe worse.  Brokers will be able to gain their clients’ trust by representing that they are complying with the SEC and acting in their “best interest,” when in reality, it will still be open season on the millions of Americans who need reliable, objective advice to navigate the complex world of finance and invest for a better future.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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