The report came from past research showing that investors were confused by the different financial figures and their jobs. The summary sets out how these professionals – from broker-dealers to investment advisers – differ in terms of “services provided, fees charged, and legal standards and obligations”.
In April 2018 the SEC voted in favour of providing a package for investors that would set out rules and interpretations in order to make the relationship between investors and financial professionals more transparent.
Under the proposed new rules, now broker-dealers and investment advisers need to provide a relationship summary to their clients to inform them about the kind of relationship and services offered to them, including standard of conduct and the fees and costs associated with those services.
“Based on my discussions with many retail investors over the last several months, it is clear to me that too many retail investors are not aware of the material aspects of their relationships with their investment professionals,” said Jay Clayton, chairman of SEC.
“The results of investor testing support our efforts to provide retail investors with a clear and concise Relationship Summary to help them make important decisions about choosing to work with an investment professional.”
The investor testing was conducted through a nationwide online survey of over 1,800 participants via RAND’s American Life Panel.