The Impact of Best Interest Regulations on Finance Industry

If you aren’t already in the finance industry, most observers don’t pay close attention to new legislation regarding financial advisors acting in the best interest of their clients. After all, why should there need to be new legislation, shouldn’t putting clients’ interests first already be a requirement? Until recently, it hasn’t. With the addition of Best Interest regulations there has been pushback from advisors, with some even planning to leave the industry entirely.

As investment advisor representatives we strive for transparency and clarity in all forms of communication with our clients.  We believe the Securities & Exchange Commission would prefer us to go beyond merely stating, “We will act in your best interest”; we must demonstrate it in all we do as trusted advisors.  Prior to engaging us, we must:

·         Adequately review your current circumstances, (know where you are now)

·         Clearly communicate our services and our fees, (with no ambiguity)

·         Distinguish and demonstrate that our services are commensurate with the fee you will pay.

Communicating clearly, simply, and completely is challenging.  We will explain the risks without understating or overstating them.  We will review your outcomes accurately, fairly and practice diligence when recommending investments. 

Full disclosure and clarity are sometimes at odds.  It is our professional responsibility to provide you with all the information you need without causing confusion.  We will not omit important information, and we will avoid getting lost in a sea of too much information.  We know that experience is our best teacher; we continually strive to become better listeners, to be forthright and uncompromising when we communicate.  We encourage our clients to ask meaningful questions and will do our very best to answer and address even those that were not asked!