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What is the Securities and Exchange Commission’s Division of Investment Management, and what does it have to do with your nest egg?

Investors look to the capital markets to build a nest egg—for retirement, for down payments on their house, or inevitable bumps along the path of life. 

While many choose to invest on their own, others turn to investment advisers. Indeed, more than 50 million Americans do so, whether it’s through your robo-adviser or wealth management apps. Further, tens of millions of Americans are directly or indirectly invested in funds. You know, mutual funds, exchange-traded funds, or your pension funds.

Leading up to the Great Depression and into the 1930s, we saw bad actors—"hawks” you may say—swooping in for families’ nest eggs. There was a disregard of fiduciary standards and lack of investment adviser or fund regulation.

When someone else is responsible for managing your nest eggs, there’s opportunities for conflicts of interest to arise between your adviser and you as an investor.

That’s why President Roosevelt and Congress passed two critical laws back in 1940: the Investment Company Act and the Investment Advisers Act.

Since then, well-regulated collective investment vehicles have been among the great financial innovations. They provide everyday investors with diversification and lower costs than individual stocks or bonds. Jack Bogle, who popularized index funds, once said: “Don’t look for the needle in the haystack. Just buy the haystack.”

The Division of Investment Management is responsible for overseeing those investment companies and advisers.

It now oversees more than 30,000 registered funds and advisers as well as 50,000 private funds. There are more than $110 trillion in these funds. That includes an awful lot of your hard-earned nest eggs.

The Division’s role is to monitor for compliance with important requirements regarding advisers and these funds. You see, advisers have a fiduciary obligation to you and aren’t supposed to put their interests ahead of yours. Advisers and funds also are required to make appropriate disclosures about things like fees and performance, as well as not being misleading.

The Division responds to the many incoming filings, registrations, and questions from market participants. It works with our Examinations and Enforcement divisions, the cops on the beat, on referrals.

It also makes recommendations to the five-member Commission to update our rules of the road, given rapidly evolving technology and business models.

I’m proud to serve alongside the more than 200 eggcellent Investment Management staff.