“This is one of those areas where by examination, [the SEC is] going to be creating a lot of the standards that advisors will come to know and love over the next few years.” @HDelux speaks with @Diana_Britton @wealth_mgmt.

The Securities and Exchange Commission released its examination priorities for 2018. In it, the regulator says its examiners will pay closer attention to the fees that retail investors are paying to advisors as well as the disclosure and calculation of those fees.

“In the past, the SEC has made fee disclosure a priority, but it couched it as a share class issue”, said Brian Hamburger, founder of the Hamburger Law Firm and MarketCounsel. “Now, it’s more expansive than that.”

“This is one of those areas where by examination, they’re going to be creating a lot of the standards that advisors will come to know and love over the next few years,” Hamburger said. “There’s no specific rule that says that investment advisors have an obligation to go out there and find the cheapest or least expensive investment for that particular objective. That said, the SEC is expanding upon their notion of, ‘Hey, as a fiduciary you have an obligation to act in their best interest, and isn’t it in their best interest to buy them the least expensive product to achieve those objectives?’’” Hamburger calls that “regulatory bootstrapping”. “Here, you’re finding the SEC imposing an obligation on advisors to be smart shoppers,” he said. “It’s a great nod to the Bogleheads out there. John Bogle’s been saying this for years, that yes, investment performance is one side of the equation, but you cannot be ignorant as to expenses.”

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