The U.S. Securities and Exchange Commission on Monday launched a program to ensure brokerages and advisers are offering reasonable investment advice and disclosing conflicts to retirement-age investors.
The initiative, known as "Retirement-Targeted Industry Reviews and Examinations (ReTIRE), comes as the U.S. government is ramping up protections for retirees.
The Labor Department in April proposed new rules that would require brokers offering retirement advice to put their clients' best interests first. SEC Chair Mary Jo White has said the SEC should proceed with its own best-interest rule for the industry.
Financial advisers are required to act as fiduciaries, putting their clients interest ahead of their own, but brokers only need to recommend "suitable" products for retail investors.
The Labor Department is concerned this legal distinction might confuse investors, and lead brokers to sell inappropriate products to line their own pockets.
The SEC said its examiners will focus on "certain higher-risk areas of registrants' sales, investment, and oversight processes, with particular emphasis on select areas where retail investors saving for retirement may be harmed."
The SEC will also make sure firms are making appropriate recommendations for retirees and disclosing conflicts related to their compensation structures and personal relationships with service providers.
Other review areas include supervision and compliance controls, as well as marketing and disclosures toward retail investors.
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