The answer: only SEC-registered broker-dealers offer SIPC insurance. Crypto platforms like FTX are not SEC-registered broker-dealers. Continue reading
The answer: only SEC-registered broker-dealers offer SIPC insurance. Crypto platforms like FTX are not SEC-registered broker-dealers.
SIPC stands for Securities Investor Protection Corporation. It was created in 1970 after several brokerage firms went belly up and as a result customers were wiped out.
All brokerage firms that sell stocks or bonds to the public, or that clear securities transactions are required to be members of SIPC. SIPC is a nonprofit corporation owned by its members. Member firms pay into a general insurance fund used to meet customer claims in case of bankruptcy.
If a broker-dealer goes bankrupt, SIPC provides insurance for the assets in investors brokerage accounts. SIPC may also offer insurance to customers from unauthorized trading in, or theft from, their securities accounts.
SIPC members must display an official sign showing their membership. Today that usually means “member SIPC” at the bottom of the brokerage firm’s home page, but if there is a physical office for customers then the requirement sign or plaque in a visible place.
What you need to know about SIPC if you’re taking the SIE exam
If you’re taking the FINRA Securities Industry Essentials (SIE) exam you need to know the following about SIPC:
SIPC offers up to $500,000 in coverage per customer for securities and cash, with a $250,000 limit for cash only. So if a broker-dealer firm goes bankrupt, then SIPC and the court-appointed Trustee work to return customers’ securities and cash as quickly as possible.
SIPC does not protect against all losses. For example, if the financial markets go down, and the value of customers’ assets declines, SIPC does not cover these type of losses.
If a customer has both a cash and margin account, the accounts are combined for SIPC coverage purposes.
To repeat, SIPC covers a maximum of $500,000 per “separate customer” at a broker-dealer or clearing firm—including up to $250,000 in cash. Total coverage can be higher for multiple accounts owned by the same person if the accounts are considered to be held by separate customers. There are five categories of separate customers defined by SIPC. These categories include (1) individual accounts; (2) joint accounts; (3) accounts held by executors, administrators, and guardians/custodians/conservators (such as UGMA accounts); (4) accounts held by corporations, partnerships, or unincorporated associations; and (5) trust accounts.
So if you are taking the SIE exam, and you get a question that asks if someone has $300,000 in a individual brokerage account, and $200,000 in a joint brokerage account with a spouse, and $400,000 in a trust account, all with the same broker-dealer, how much is covered by SIPC in the event the firm goes bankrupt?Because all three accounts are considered to be held by separate customers, the correct answer is $900,000 or all of the funds.
If your SIE exam asks how much is SIPC covered if the market falls dramatically and the value in an investor’s account drops by half, the correct answer is zero, because SIPC only covers investor losses due to broker-dealer failure, not due to market losses.
Read the results of Solomon Exam Prep’s latest poll on the topic of cryptocurrency regulation – and learn which license you’d need for either outcome. Continue reading
With the regulatory status of Bitcoin and other cryptocurrencies still up in the air, a recent Solomon LinkedIn poll found that 60% of Solomon customers think cryptocurrencies should be treated as commodities, while 40% said they thought cryptocurrencies should be regulated as securities.
Thus far the SEC has avoided clearly stating that cryptocurrencies are securities. To do so, the SEC would likely have to show that cryptocurrencies meet the “Howey Test,” which says that securities must have four characteristics. According to this test, a security involves (1) an investment of money that (2) involves a common enterprise (3) in which the investors expect to make a profit, and (4) the profits will be derived from the efforts of someone other than the investor.
If the SEC, Congress, or the courts declare that cryptocurrencies meet the Howey Test and are therefore securities, Solomon’s got you covered with the Series 7 General Securities Representative Exam Guide. This FINRA license allows you to engage in “the solicitation, purchase and/or sale of all securities products.”
If cryptocurrencies don’t meet the Howey Test, they could be regulated as commodities. These are goods such as wheat, gold, and pork bellies. Why might cryptocurrencies fit in with these others? Because commodities are all highly standardized so that they can be freely bought and sold on exchanges without worrying about differences in quality—every ounce of gold is pretty much like every other ounce of gold. Likewise, every Bitcoin is like every other Bitcoin.
If you’re studying for securities licensing exams, such as the SIE or the Series 7, then you should understand the terms “accredited investor” and “QIB.” Continue reading
If you’ve been studying for the Series 7, 6, 14, 22, 24, 65, 79, or 82, or the Securities Industry Essentials (SIE), then you’ve had to learn about Regulation D private placements and Rule 144A sales. Regulation D private placements are securities offerings that are exempt from the normal SEC registration process and in many cases are sold only to “accredited investors” or limit the involvement of investors who are not accredited. Rule 144A sales are sales of unregistered securities to large institutional investors known as “qualified institutional buyers” or QIBs for short.
You may have wondered about the difference between accredited investors and QIBs. On the surface, these may seem similar. Each refers to a category of investor with resources and/or knowledge above and beyond the average retail investor. So why not just have one standard for buyers under both Rule 144A and Regulation D? After all, the purpose of both Regulation D and Rule 144A is the same: to allow wealthier and more sophisticated investors easier access to investments that may be too risky for the average investor.
To begin to answer this question, we have to start with the fact that wealth and sophistication fall on a spectrum. Investors aren’t neatly divided between small retail investors and huge financial institutions that move millions around without blinking an eye.
Accredited Investors
You could think of accredited investors as a middle ground between these two extremes. Accredited investors are investors whose financial status or investment knowledge may give them a greater ability to handle the risks inherent in a private placement. There are many ways to qualify as an accredited investor but they all have one thing in common, which is that the SEC believes they indicate an ability to take on risks that regulators believe are unsuitable for most retail investors.
Accredited investors are investors whose financial status or investment knowledge may give them a greater ability to handle the risks inherent in a private placement.
All of the following are considered accredited investors:
Banks, broker-dealers, investment advisers, insurance companies, and investment companies
Corporations, trusts, partnerships, and LLCs with more than $5 million in assets
Most employee benefit plans with more than $5 million in assets
The issuer’s directors, executive officers, and general partners
If the issuer is a privately owned fund, (such as a hedge fund), a knowledgeable employee of the fund, which means an employee with at least 12 months’ experience working on the fund’s investment activities
Individuals with income of $200,000 in each of the last two years, or $300,000 in combination with a spouse or spousal equivalent such as a domestic partner
Individuals with a net worth more than $1 million, alone or with a spouse or spousal equivalent, not including primary residence
Individuals who hold any of these three designations in good standing:
Licensed General Securities Representative (Series 7)
Any firm where all owners are accredited investors (e.g., venture capital firms)
Any other entity with more than $5 million in investments that was not formed specifically to qualify as an accredited investor; the purpose of this category is to include entities that don’t neatly fit into any of the above categories, such as:
Native American tribes
Labor unions
Government bodies, including those of foreign governments
Investment funds created by government bodies
New types of business entities that may be introduced by new laws
An accredited investor that is not an individual—such as a business, governmental, or nonprofit entity—is sometimes called an institutional accredited investor (IAI).
Qualified Institutional Buyers
QIBs are a narrower group of large institutional investors. A QIB is a large institutional investor that owns at least $100 million worth of securities, not counting securities issued by its affiliates. For registered broker-dealers, the threshold is lower, just $10 million. A bank must also have a net worth of at least $25 million in order to be considered a QIB.
If a firm has discretionary authority to invest securities owned by a QIB, those securities count toward whether the firm itself is considered a QIB. So if a broker-dealer has $9 million worth of securities in its own accounts, and holds $1 million worth of securities in a discretionary account belonging to a QIB, then the broker-dealer is itself a QIB.
Common examples of QIBs include broker-dealers, insurance companies, investment companies, pension plans, and banks. However, any corporation, partnership, or LLC could qualify as a QIB. So can an IAI that owns at least $100 million in securities. Individuals can never be QIBs, regardless of their assets or financial sophistication.
Individuals can never be QIBs, regardless of their assets or financial sophistication.
Rule 144A allows QIBs to buy unregistered securities at any time, and freely trade these shares to other QIBs. In effect, QIBs can trade unregistered shares among themselves with almost the same ease as trading registered shares. Selling unregistered securities to anyone other than a QIB commonly requires a the seller to hold the securities for a period of up to 12 months.
A QIB will virtually always meet the criteria to be an accredited investor, whereas an accredited investor may fall well short of QIB status.
Over time, other securities laws and regulations have made use of these two well-known categories. For example, in 2019 the SEC gave issuers more flexibility to test the waters with potential investors before deciding whether to go through with a public offering. When deciding which investors were sophisticated enough to receive test-the-waters communications, the SEC limited these communications to QIBs and institutional accredited investors. Additionally, references to institutional accredited investors have become more common, such as when the SEC revamped its rules around integration of offerings in March 2021.
Know your QIBs from your accredited investors and be ready to pass your securities exam with Solomon Exam Prep.
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For many when choosing bonds the most important factor is the tax implications. Knowing the after-tax yield and tax-equivalent yield calculations is critical. Continue reading
Bonds can be nice, reliable investments. Pay some money to an issuing company or municipality, receive interest payments twice a year, and then get all of your original investment back sometime down the road. Sounds like a plan.
But which bonds are best for a specific investor? There are many factors for bond investors to consider when choosing which bond to buy, but for many the most important is the tax implications of investing in one bond instead of another. This concern is most prominent when an investor compares a corporate bond to a municipal bond. For reference, a corporate bond is one issued by a corporation or business, while a municipal bond is one issued by a state, city, or municipal agency.
Comparing the tax implications of these bonds is important because the interest payments that investors receive from municipal bonds are typically not taxed at the federal level. Conversely, interest payments on all corporate bonds are subject to federal taxation. This means that someone in the 32% tax bracket will have to give Uncle Sam 32% of his interest received from a corporate bond, while he will not give up any of his interest received from a municipal bond. Additionally, an investor does not pay state taxes on municipal bond interest if the bond is issued in the state in which the investor lives. Corporate bond interest, on the other hand, is always subject to state tax.
interest payments taxed federally
interest payments subject to state tax
interest payments not federally taxed
interest payments not taxed by state if issued in state local to investor
For these reasons, when comparing a corporate bond to a municipal bond, understanding the after-tax yield and the tax-equivalent or corporate-equivalent yield is essential. This is true both for investors and for those who will be taking many of the FINRA, NASAA, and MSRB exams. So let’s look at how to calculate those yields.
After-Tax Yield
First the after-tax yield. The after-tax yield tells you the amount of a corporate bond’s annual interest payment that an investor will take home after accounting for taxes he will be assessed on that interest. Once that amount is known, the investor can compare it to the yield he would receive from a specific municipal bond and see which potential investment would put more money in his pocket. When calculating the after-tax yield, start with the annual interest percentage (a.k.a. coupon percentage) of the corporate bond, which represents the percent of the bond’s par value that an investor receives each year in interest. For instance, a corporate bond that has a $1,000 par value and an interest rate of 8% will pay an investor $80 dollars in annual interest ($1,000 x 0.08 = $80). You then multiply the coupon percentage by 1 minus the taxes an investor will pay on the corporate bond that he will not pay on the municipal bond that he is considering.
This is where it sometimes gets tricky. What taxes will an investor not pay when investing in a municipal bond that he will pay when investing in a corporate bond? Remember that for just about all municipal bonds, investors do not pay federal tax on interest received.
The formula for after tax yield is:
After-tax yield = Corporate Bond Annual Interest Rate x ( 1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)
On the other hand, an investor always pays federal taxes on interest received from a corporate bond. Additionally, an investor does not pay state taxes on interest payments from a municipal bond issued in the state in which the investor lives.
On the other hand, an investor always pays state taxes on interest received from corporate bonds. So if you see an exam question in which you need to calculate the after-tax yield of a corporate bond to compare it the yield on a municipal bond, you will always subtract the investor’s federal income tax rate from 1 in the equation. You will also subtract the investor’s state tax rate from 1 if the municipal bond is issued in the investor’s state of residence.
Seems simple, right? Here’s a question to provide context:
Marilyn is a resident of Kentucky. She is considering a bond issued by XYZ Corporation. The bond comes with a 7% annual interest rate. Marilyn is also interested in purchasing municipal bonds issued in Ohio. If Marilyn has a federal tax rate of 28% and Kentucky’s state tax rate is 4%, what is the after-tax yield on XYZ’s bond?
To answer this question, begin with the interest rate on the XYZ bond, which is 7%. Then subtract from 1 the taxes Marilyn will not pay if she invests in the municipal bond in question. She will not pay federal taxes on the municipal bond interest, so you would subtract 28%, or .28. However, because Marilyn is a resident of Kentucky and the municipal bonds she is considering are issued in Ohio, she will pay state taxes on the bond. That means you would not subtract her state tax rate (0.04) from 1. After subtracting .28 from 1 to get 0.72, you multiply that amount by the 7% coupon payment. Doing so gives you a value of 5.04 (7 x 0.72 = 5.04%). This means that the interest amount she would take home from the XYZ bond would be equivalent to what she would receive from a municipal bond issued in Ohio that has a 5.04% interest payment. If she can get a bond issued in Ohio that has a higher interest payment than 5.04%, she would take home more money in annual interest payments than she would from the XYZ bond.
Tax-Equivalent Yield
The second approach an investor can take to compare how a potential bond investment will be affected by taxation is to calculate the tax-equivalent yield (TEY). This calculation is also known as the corporate-equivalent yield (CEY). The TEY/CEY measures the yield that a corporate bond will have to pay to be equivalent to a given municipal bond after accounting for taxes due. To calculate this yield, you take the annual interest of the given municipal bond and divide it by 1 minus the taxes the investor will not pay if she invests in the municipal bond that she would pay if she invested in a corporate bond.
Here’s the formula for tax-equivalent yield:
Tax-equivalent yield = Municipal Bond Annual Interest Rate / (1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)
When determining what tax rates to subtract from 1 in the denominator, the same principal as described above applies. That is, the investor will not have to pay federal tax on the municipal bond, so her federal rate is always subtracted from 1. The investor will also not have to pay state tax on the bond if it is issued in the state in which she lives. If that is the case, the investor’s state tax rate should also be subtracted from 1. However, if the investor lives in a different state than the state in which the bond is issued, she will have to pay state taxes on the interest payments. In that case, her state tax rate would not be subtracted from 1.
Here’s another question to provide context.
Franz, a resident of Michigan, has purchased a Michigan municipal bond that pays 4% annual interest. If his federal tax bracket is 30% and the Michigan state tax rate is 4%, what interest rate would he need to receive on a corporate bond to have a comparable rate after accounting for taxes owed?
To answer this question, begin with the interest rate on the Michigan municipal bond, which is 4%. Then subtract from 1 the taxes that Franz will not pay on that bond that he would pay if he invested in a corporate bond. He wouldn’t pay federal taxes on the municipal bond interest, so you would subtract 0.30 from 1. Additionally, since the bond is issued in Michigan and he is a Michigan resident, Franz will not pay state taxes on the bond. So you subtract Michigan’s state tax rate of 4%, or 0.04, from 1 as well. After subtracting 0.30 and 0.04 from 1 to get 0.66, you divide that number into the 4% municipal bond annual interest. Doing so gives a value of 6.06 (4 / 0.66 = 6.06). This means Franz would need to find a corporate bond that pays 6.06% in annual interest to match the amount of interest he will take home annually from the Michigan municipal bond after accounting for taxes.
Many people are confused by the concepts of the after-tax and tax-equivalent yields. But you don’t have to be one of them. Just follow this simple approach and any questions you see on this topic will not be overly taxing.
On December 22, the SEC announced a major rule change that it hopes will clarify what investment advisers can and can’t do when it comes to marketing their services. Continue reading
On December 22, the SEC announced a major rule change that it hopes will clarify what investment advisers are permitted to do when it comes to marketing their services.
The SEC cited the need to adapt its rules to changing communications technology. “The marketing rule reflects important updates to the traditional advertising and solicitation regimes, which have not been amended for decades, despite our evolving financial markets and technology,” said SEC Chairman Jay Clayton in announcing the overhaul.
The SEC’s current rules about advertisements and paying for client referrals will be consolidated into a single rule. Paying a third party to solicit new clients will now be considered a form of advertising, as will paid testimonials and endorsements and some one-on-one communications with clients.
Currently, each of these activities is subject to a separate set of requirements. By bringing them under the definition of advertising, the new rule replaces this complex system with a set of six broad principles that all forms of IA advertising must adhere to:
No untrue statements or omissions of material facts
No unsubstantiated statements
No statements that imply something untrue or misleading
When the benefits of the IA’s services are discussed, there must be a fair and balanced discussion of material risks
“Anti-cherry picking”: the IA must present its track record in a fair and balanced way
No advertisements that are otherwise materially misleading (intended as a “catch-all provision” for misleading advertising not covered above)
The rule change is expected to take effect sometime in the spring of 2021 and will affect the Series 65 and Series 66 exams.
On November 2, the SEC announced a collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” Continue reading
On November 2, the SECannounceda collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” The changes affect Regulation A, which governs small public offerings; Regulation D, which governs private placements; and Regulation CF, which governs crowdfunding. This system of exemptions allows various small offerings to avoid the normal registration process required by the Securities Act.
The rule changes should provide a clearer choice as to which exemption is most appropriate to an issuer, based on how much the issuer needs to raise and other factors.
The changes also seek to clarify how issuers can avoid “integration” of exempt offerings. Integration is the risk that exempt offerings will be considered a single offering by the SEC, because the offerings are too similar.
Highlights of the changes include:
If two exempt offerings are conducted more than 30 days apart, they are almost always protected from integration.
An issuer can “test the waters” with potential investors before deciding which exemption it will use for an offering.Test-the-waters communications solicit interest in a potential offering before the issuer has filed anything with the SEC.Previously, an issuer could only test the waters after deciding that its potential offering would take place under Regulation A.
Caps on the amount that may be raised through these exemptions have been increased:
Crowdfunding: from $1.07 million to $5 million
Regulation A, Tier 2: from $50 million to $75 million
Regulation D, Rule 504: from $5 million to $10 million
Make “bad actor” exclusions more consistent across different exemptions.
The rule changes will take effect early next year.Until the changes take effect, securities exam questions will continue to be based on the old rules. FINRA Exams affected by these rule changes include the SIE, Series 6, Series 7, Series 14, Series 22, Series 24, Series 65, Series 66, Series 79, and Series 82.
On Wednesday, the SEC finalized rule changes that will broaden its definition of “accredited investor” to encompass industry professionals who have earned certain FINRA licenses. Continue reading
On Wednesday, the SEC finalized rule changes that will broaden its definition of “accredited investor” to encompass industry professionals who have earned certain FINRA licenses.
An accredited investor is an investor considered sophisticated enough to weigh an investment’s merits independently. Accredited investors have easier access to certain types of investments, such as private equity offerings.
Under the newly expanded definition, General Securities Representatives (Series 7), Private Securities Offerings Representatives (Series 82), and Licensed Investment Adviser Representatives (Series 65) are now accredited investors. The SEC indicated that it may add other FINRA licenses later. Note that passing the exam by itself does not make you an accredited investor – you must have and maintain the license.
The rule change also allows “spousal equivalents” such as domestic partners to qualify as accredited investors based on the total income and assets of both partners, a benefit previously limited to couples who are legally married. Native American tribes and foreign governments now qualify as accredited investors as well.
The Solomon Exam Prep team is always on the lookout for how current developments affect the securities industry. For more updates from our Industry News blog, use the subscribe form on this page.
Effective September 5, 2017, for most securities, the SEC will shorten the regular-way settlement period from three to two business days. Continue reading
Effective September 5, 2017, for most securities, the SEC will shorten the regular-way settlement period from three to two business days. This means:
Securities must be paid for and delivered by two business days from the trade date
An investor doesn’t become the owner of record of a security until two business days after purchase
The regular-way settlement cycle is often referred to as T+2, which refers to trade date plus two business days.
This shorter settlement period for the trading of secondary market securities has been discussed by the SEC for years. The change is expected to lower margin requirements for clearing agency members, reduce liquidity stress when markets are volatile, and harmonize settlement with European markets, which moved to T+2 in 2014.
This settlement period will not apply to every securities transaction. T+2, like T+3 before it, will apply to:
Stocks
Bonds
Municipal securities
Exchange-traded funds
Mutual funds traded through a brokerage firm
Unit investment trusts
Limited partnerships that trade on an exchange
This change affects the Series 6, Series 7, Series 24, Series 26, Series 27, Series 28, Series 52, Series 53, Series 62, Series 65, Series 66, and Series 82.
But never fear—Solomon has already updated all study materials to reflect this change.
The securities industry moves fast. Don’t get left behind!
Visit www.solomonexamprep.com or call us at 503-601-0212 for more information about the latest securities exam preparation and education.
Like a groom who finally ran out of excuses, Labor Department secretary Alexander Acosta announced on Monday, May 22, 2017, that the DOL would no longer seek to delay implementation of the Obama-era fiduciary rule. Continue reading
Like a groom who finally ran out of excuses, Labor Department secretary Alexander Acosta announced on Monday, May 22, 2017, that the DOL would no longer seek to delay implementation of the Obama-era fiduciary rule. The rule goes into effect on June 9, 2017.
The fiduciary rule requires financial professionals to put an investor’s interests first—that is, to meet a fiduciary duty—when providing investment advice regarding virtually any retirement plan.
In the past, financial professionals only had to demonstrate that an investment was suitable, which allowed bad actors to recommend expensive investments with high commissions that diminished investors’ retirement savings over time. This is known as conflicted advice, and the Obama White House estimated that it costs investors $17 billion a year.
When the rule was submitted for public comment, the vast majority of commenters were in favor of the proposed regulation.
Opponents of the rule, including the Trump administration, believe that implementation of the rule will raise costs and limit choices for investors.
Secretary Acosta stated that, although the rule will no longer be delayed, the Trump administration “presumes that Americans can be trusted to decide for themselves what is best for them,” indicating that the rule could possibly be repealed or rewritten in the future.
However, those who defend the fiduciary rule claim that average investors, faced with confusing industry jargon, cannot always make the best investment choices for themselves and will benefit from the protection that the rule provides.
The Department of Labor’s fiduciary rule goes into effect on June 9, 2017, but it will not be enforced until January 1, 2018, so firms have until the end of the year to fully implement the required changes.
Once the fiduciary rule is in effect, it will mean more openings for people who have passed the Series 65 or Series 66 exam, which means that now is the perfect time to start studying. Visit Solomon Exam Prep today for more information about our study materials!
The Department of Labor’s fiduciary rule has been subject to more back and forth than an Olympic table tennis match. Will it go into effect? Will it be repealed? Or will it merely be delayed? The answer seems to change from day to day. Continue reading
Update: On March 1, 2017, the Department of Labor proposed a 60-day delay of implementation of the fiduciary rule. The DOL will allow a 15-day comment period before determining whether to finalize the delay.
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The Department of Labor’s fiduciary rule has been subject to more back and forth than an Olympic table tennis match. Will it go into effect? Will it be repealed? Or will it merely be delayed? The answer seems to change from day to day. While some groups work toward implementation of the rule, other groups fight against it, questioning whether the Department of Labor even has the authority to issue such a rule.
The fiduciary rule would require financial professionals to put an investor’s interests first—that is, to meet a fiduciary duty—when providing investment advice regarding covered retirement plans.
Let’s look at a brief timeline of the life of the fiduciary rule so far:
February 23, 2015: President Obama called for the Department of Labor to move forward with the creation of rules to limit conflicts of interest regarding investor retirement accounts.
April 14, 2016: The Department of Labor proposed the fiduciary rule, intended to begin implementation on April 10, 2017.
February 3, 2017: President Trump issues an executive order directing the DOL to review the fiduciary rule.
February 8, 2017: A federal district court judge in Texas upheld the Department of Labor’s authority to issue the fiduciary rule.
February 17, 2017: A federal district court judge in Kansas upheld the Department of Labor’s authority to issue the fiduciary rule.
When President Trump issued his executive order, he ordered the Secretary of Labor to provide an “economic and legal analysis” of the rule to answer the following questions:
Will it reduce investors’ access to a variety of retirement services, offerings, product structures, or other information or advice?
Has it disrupted the retirement services industry in a way that could harm investors?
Is it likely to increase the amount of litigation in the industry and thereby cause an increase in prices for investors?
If the Secretary of Labor determines that the answer to any of these questions is yes, it must revise or rescind the rule.
However, many firms are proceeding with their plans to implement the fiduciary rule whether or not the rule as it now exists goes into effect. For example, Merrill Lynch has said it will no longer offer commission-based brokerage IRA accounts. Instead, the firm will offer level fee investment advisory services regardless of the outcome of the fiduciary rule.
Senator Elizabeth Warren of Massachusetts reached out to over thirty leading finance companies, and the overall response from the companies that responded was that they support the fiduciary rule and are prepared to implement it. For example, TIAA wrote, “Putting our clients’ best interests first is a core value at TIAA and, accordingly, we support a best-interest standard,” and Fidelity noted that the firm is “fully prepared to comply with the rule if and when it becomes applicable.”
So even though we don’t know what will be the ultimate fate of the DOL fiduciary rule, it’s safe to say that it has already begun to change the face of the financial industry.
