Phyllis Borzi, Labor Department assistant secretary for the Employee Benefits Security Administration (EBSA) from 2009 to 2017 and key architect of the department’s now-defunct fiduciary rule for advising retirement accounts, spares no disdain for the Securities and Exchange Commission’s proposed Regulation Best Interest.
In an interview with ThinkAdvisor, she dismisses Reg BI’s use of “best interest” as “a marketing slogan” and the proposed rule “not even as strong as [the] suitability [standard].” She is especially critical of Regulation Best Interest because it allows financial advisors to not work in the client’s best interest as long as they disclose the conflict.
Borzi continues to advocate strongly for the fiduciary standard of care because, she argues, brokers are “trapped in a compensation system” requiring them to adhere to a loyalty duty not to their clients but to their firm or to product manufacturers.
But, she insists, neither can investors “rely on the government to protect [their] interest” when seeking investment recommendations. Accordingly, they must try to protect themselves by hiring an advisor who not only says they’re a fiduciary but who’ll commit that to writing.
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