%0 Journal Article %A John A. Turner %T Implications of Behavioral Economics for the SEC Fiduciary Standard and the Regulatory Protection of Pension Participants %D 2018 %R 10.3905/jor.2018.6.2.053 %J The Journal of Retirement %P 53-60 %V 6 %N 2 %X Depending on the “lens” through which they are viewed, public policies can be seen very differently, even to the point of judging them effective versus ineffective. A case in point is the SEC fiduciary standard. In this case, traditional rational economics and behavioral economics have much different implications concerning the adequacy of the level of protection provided to nonprofessional investors. Viewed through the lens of traditional rational economic theory, sophisticated, well-informed investors are well-served by the SEC fiduciary standard’s emphasis on disclosure of conflicts of interest and fees and the prevention of fraud. However, it seems far less effective in preventing problems when viewed through the lens of behavioral finance, particularly financial literacy, where many if not most investors display knowledge shortcomings and exhibit well-known behavioral biases. For example, by not establishing a definition for low or reasonable fees, the SEC fiduciary standard for good advice permits advisers to meet the standard of acting in the best interest of the client, while providing advice that would lead to the client being substantially worse off once fees are taken into account.TOPICS: Wealth management, legal/regulatory/public policy, pension funds, in wealth management %U https://jor.pm-research.com/content/iijretire/6/2/53.full.pdf