In this informative interview from the Fi360 Conference in Nashville, John Sullivan from 401(k) Specialist Magazine speaks with Fred Reish, a renowned retirement plan attorney from Drinker Biddle, about the evolving landscape of financial regulation — particularly the SEC’s Regulation Best Interest (Reg BI) and its implications.
Fred Reish explains that Reg BI was delayed earlier in the year due to the government shutdown, though there is optimism that it will be finalized by June. SEC Chairman Jay Clayton was a strong proponent of pushing Reg BI forward, although internal disagreements among commissioners slowed the process.
The conversation then moves to harmonization between regulatory bodies like the SEC and the Department of Labor (DOL). Reish notes that although Reg BI and fiduciary interpretations for Registered Investment Advisers (RIAs) will be released simultaneously and show some alignment, they are not fully harmonized. The key difference lies in the scope of obligation:
- For broker-dealers, Reg BI applies on a transactional basis—they must recommend a good investment but are not required to monitor it.
- For RIAs, a fiduciary duty persists, requiring ongoing responsibility for the advice given.
Reish also predicts that the DOL will likely follow up with exemptions for certain compensation structures and may even broaden the definition of fiduciary advice, especially for rollovers. He highlights the massive volume of rollovers, projected at $400–500 billion annually, as a major regulatory concern.
The interview concludes with Reish emphasizing the long-term importance of sound financial advice, especially as retirees rely on these funds for 20–30 years.