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New Rules from the SEC? We Still Adhere to the Strictest Standards.

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The SEC recently passed a package of new regulations that have caused a great deal of controversy. We are happy to report that Halpern Financial far exceeds the SEC’s new requirements. However, we are dismayed that many aspects of Regulation Best Interest appear to make the world of financial advice even more confusing to consumers. Despite its name, “Regulation Best Interest,” this ruling opens the door to practices that, paradoxically, run counter to investors’ best interests.

Here’s What Happened

Part of the SEC’s package was Regulation Best Interest, a rule for brokers. This increased the standard from the lower “suitability” standard to a new standard called “best interest.” Brokers are still allowed to collect a commission and may have conflicts of interest.

The new rule also requires better disclosure about conflicts of interest, and eliminates sales contests, bonuses and other incentives to sell a certain type of security in a certain timeframe. It also requires brokers to consider costs and other factors when deciding whether a particular trade is in the best interest of the customer.

Halpern Financial is not a broker. We have very intentionally avoided this business structure because we feel it is not in the client’s best interest. We are a Registered Investment Advisory firm, and proud of it! As an RIA, we are subject to the fiduciary standard (far more stringent than Regulation BI).

The concerning part of the SEC’s package was a change to the   interpretation of the word “fiduciary” as it applied to Registered Investment Advisory firms. Previously, advisors at RIA firms had to act in a fiduciary capacity, and they still do. However, before the Regulation BI package, RIA firms were required to “seek to avoid conflicts of interest and make a full disclosure of all material conflicts of interest.” Now, a fiduciary must “seek to avoid conflicts of interest OR make a full disclosure of all material conflicts of interest.” 

We do not think it should be fine to do the wrong thing for clients…even if disclosed. This definition completely changes the meaning in a way that is counter to what a fiduciary should do—and what consumers expect from their financial professionals. This change would allow hybrid RIAs to say they are fiduciaries as long as they disclose their commission. For a truly transparent and objective approach, we believe a fiduciary should not receive compensation from any entity except the client.

This new regulation comes on the heels of recent updates to the CFP Board’s Code of Ethics and Standards (a standard we already meet).  The CFP standards for maintaining a fiduciary duty are far more strict than this new ruling.

Continued Commitment to Fiduciary Standard

No matter what the letter of the law is from the SEC, we will continue to surpass the SEC Best Interest Rule and adhere to the strictest definition of a fiduciary per the CFP Board’s code of Ethics and Standards. We are committed to doing what is truly in the client’s best interest—not what is technically in the client’s best interest. A fiduciary should avoid the conflict of interest inherent in commissioned payment structures.

Halpern Financial is:

  1. Independent – this means that we can select from ANY investment we choose.  We have zero incentive to select any fund company or product, and are never compensated or penalized for those choices.  This removes the conflict of interest—and allows us access to expertise and research from many fund companies.
  2. Fee only – The only compensation we receive is from our clients’ fee. This puts us all in the same boat, rowing towards success together, and it means we are not incentivized to make adjustments unless we truly believe they are in your best interests. 
  3. Institutional – Our investment platform has no transaction fees and allows us to offer the lowest share class costs available to all of our clients. Typically, this “bulk pricing” is not available to individual investors. We are continually trying to find “change in the couch cushions” for our clients!
  4. Committed to continued excellence. We seek to stay on the cutting edge of financial planning strategies, technology, cybersecurity, and practice management. We frequently review the portfolios to ensure we are using the best solutions out there for each client’s needs—and we are proud to offer solutions that are incredibly cost- and tax-efficient. Each member of the team sincerely wants to do the right thing to help and delight our clients.

Since we committed to a fee-only, fiduciary standard long before it was common, we want to highlight our continued dedication to doing the right thing for our clients and the vast difference between our standards and these recent SEC changes. As always, please feel free to reach out with any questions.


Read more:

Financial Planning: SEC 'guts' RIA industry with a footnote, degrading fiduciary duty

Wall Street Journal: New SEC Rule Heightens Broker Responsibilities to Investors


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