Teachers and military personnel will benefit from the protections provided by the Securities and Exchange Commission's advice reform rules, the head of the agency said Wednesday.
As the SEC was working on the regulatory package, it found that those two groups of investors were "particularly susceptible" to paying too much for advice, SEC Chairman Jay Clayton told the Securities Enforcement Forum in Washington.
"Teachers and military folks hold a special place in all our hearts at the SEC," Mr. Clayton said. "For the most part, their money is long-term money. If they're paying 250 [basis points] or 300 bps and they don't know it, and they could be paying 15 or 20, that's not good."
In June, the SEC approved advice reform that centers on Regulation Best Interest, which is designed to raise broker advice requirements above the current suitability standard. The package also includes the agency's interpretation of fiduciary duty that will continue to govern investment advisers.
The SEC also has launched outreach initiatives that target teaches, members of the armed services and veterans. The agency is emphasizing to them the importance of saving and investing as well as researching investment products and financial advisers.
"That whole space, we want to see more transparency," Mr. Clayton said. "We want to see people understand what they're paying and what they're getting for what they're paying."
The SEC is trying to help teachers and military personnel be smart shoppers for financial advice no matter who provides it.
"We're not driving toward a particular business model," Mr. Clayton said. "But at least have the consciousness to understand what you're getting and allow people to make those choices."
[Recommended video: A Marine's guide to financial planning]
Reg BI, as it's known, and a disclosure document, Form CRS, that is meant to help investors distinguish between brokers and investment advisers, must be implemented by June 30.
The new rules were crafted with an eye toward facilitating compliance inspections, Mr. Clayton said. He implied the financial industry should take the deadline seriously.
"I think people should be ready," Mr. Clayton said.
[Investing in profitability, performance and people: Register for our Top Advisory Firm Summit.]
Daniel M. Gallagher, a former SEC member who moderated Mr. Clayton's session at the conference, said the industry should brace for an aggressive SEC enforcement effort on Reg BI.
"Given the drama and the history of this rulemaking, I would expect the agency to come out of the gates in a very strong manner with respect to examinations for compliance with the rule," Mr. Gallagher said in an interview.
One wildcard is litigation against Reg BI recently filed by several state attorneys general and a network of investment advisers. Opponents argue the measure ignored congressional intent and put investment advisers at a competitive disadvantage to brokers.