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from firms as they assess where they are in their compliance. ance with the new rule,” and that he expects “that the regulatory
The “lack of credible guidance” from the SEC is also becoming response will depend on the SEC staff’s view of the severity of the
more apparent, Joseph said. actual or potential violations. As is typical with other new rules
More and more questions have surfaced regarding several such as Regulation Best Interest, I expect that both examinations
compliance-related issues: and enforcement will have this as a priority item on their agenda.”
• The presentation of net performance at the transaction or Registrants, Joseph continued, “should not be surprised by this
deal level; scrutiny because the regulator has telegraphed its intent to do so.”
• What types of client communications are carved out from Expect more guidance from the SEC, however, Joseph
the definition of advertisement; explained, which “may take the form of a risk alert, updated
• The obligations of third-party marketers who are not reg- FAQs on the commission’s website, and/or speeches at indus-
istered broker-dealers; and try conferences. We cannot rule out public enforcement
• How historical marketing documents that may still be actions or examination deficiencies (which are confidential),
available to investors should be treated. but those will likely target what the SEC staff views are more
Joseph warned that there’s “no grace period for final compli- egregious violations of the marketing rule.”

n early October, the Social Security Administration set the short of the ultimate rate of inflation.
Ifinal cost-of-living adjustment, or COLA, for Social Security As pointed out in a ThinkAdvisor column penned by
benefits in 2023 at 8.7%. This will be the largest increase since Marcia Mantell, founder and president of Mantell Retirement
1981, when the COLA topped 11%, and the fourth largest in Consulting, all Social Security COLAs, including the 2023
the history of the Social Security program. The 2023 COLA, automatically apply each year after one’s “offi-
adjustment will increase the average monthly cial” primary insurance amount is calculated at
retiree benefit from its current level of $1,656 age 62. As such, clients do not need to claim
by roughly $140. early to get the benefits of the annual COLA.
Mary Johnson, Social Security and Despite this, many clients in Mantell’s
Medicare policy analyst at The Senior experience mistakenly believe they must
Citizens League, says a COLA adjustment claim early to benefit from annual COLAs.
in this realm is rare, and she advises ben- She urges advisors to be “connecting the
eficiaries to “enjoy it now.” dots” for clients with respect to Social
“This may be the first and possibly the Security’s benefit formula.
last time that beneficiaries today receive a “COLAs are applied on an accumulated
COLA this high,” Johnson told ThinkAdvisor basis,” Mantell wrote. “There is no need for
in October. “There were only three other times clients to claim benefits now unless it’s part of
since the start of automatic inflation adjustments their holistic retirement income plan. Clients will
that COLAs were higher, between 1979 and 1981.” not lose the new COLA, but they should lose some of
The Social Security Administration uses average inflation that gnawing anxiety.”
in the third quarter of each year, based on the consumer price While the average Social Security check will grow in 2023,
index for urban wage earners and clerical workers, to calculate Medicare Part B premiums are set to drop. Medicare Part
the benefit adjustment for the following year. B premiums, which pay for doctor and hospital outpatient
Without a COLA that adequately keeps pace with inflation, services, are automatically deducted from Social Security
Social Security benefits purchase less over time, and that can checks. The standard Part B premium in 2023 will be $164.90,
create hardships especially as older Americans live longer a decrease of $5.20 per month. The annual deductible for Part
lives in retirement, Johnson said. B will also decrease from $233 in 2022 to $226 in 2023.
It remains to be seen whether the 8.7% COLA will keep Between the Social Security COLA and the Medicare pre-
pace with inflation in 2023, as the sizable 5.9% COLA received mium adjustments, most beneficiaries will see more money in
by Social Security beneficiaries during 2022 fell significantly their Social Security checks next year. That is a positive thing,

DECEMBER 2022/JANUARY 2023 INVESTMENT ADVISOR 31