Individual Investors Mystified By SEC's Best-Interest Disclosures, Study Finds

Research by four adviser and consumer groups found that the Securities and Exchange Commission's (SEC's) proposed Regulation Best-Interest disclosures not only confuse investors but also give them a false sense of confidence that their investment professional will make their money grow, reports Financial Advisor . The AARP, the Consumer Federation of America, the Certified Financial Planner Board of Standards, and the Financial Planning Coalition studied investors' reactions to the SEC's proposed "customer relationship summary" form, which is supposed to help investors understand key differences between broker-dealers and investment advisers. The study found that investors did not understand disclosures regarding the differing legal obligations that apply to brokerage and advisory accounts. Most also did not understand the term "fiduciary standard;" the distinctions between different payment models, fees, and associated services; or which type of fees might cost more.