Advisors Split on DOL Fiduciary Rule

There’s nothing quite like compiling responses to the Department of Labor’s fiduciary rule straight from the horse’s mouth: that of the individual advisor.

Last month, consultant Howard Schneider decided to take stock of where advisors stood on the rule and both sides seemed as fired up as ever about the rule.

Supporters, fee-based and fee-only planners, were quick to point out that they held already conducted their business under a fiduciary standard and that the rule would hardly affect them.

Detractors said the rule was a waste of time, or at times expressed their displeasure in ways not fit for publication.

Answers to the online survey of about 300 advisors, conducted by Schneider’s firm Practical Perspectives, was compiled in early August just before regulators decided to delay key tenets of the rule by 18 months until July 1, 2019.

A dozen responses in support of and against the rule were selected out of the 90 comments that were submitted.

Comments touched on aspects of the fiduciary rule’s overreach, implementation, operation efficiency and whether it met the needs of clients. Answers in those categories were included in one of the two sections below.

Some of the responses have been edited slightly to conform to rules of standard grammar.

From the Supporters

• I welcome the DOL fiduciary rule. As a CFP that has been practicing using the fiduciary standard, I feel the rule levels the playing field.
• As a CFP and an IAR (investment advisor representative) it should have little impact on my business since I am already a fiduciary for many years.
• DOL accelerated our efforts to move to fee based. Great for us!
• Eventually the DOL ruling will drain the swamp and get rid of rogues and uneducated hucksters only looking to make a fast buck.
• I always like as much information as possible. I have already gotten a few clients since I have been following the DOL rule for all accounts – retirement or otherwise – since I began my practice.
• I think it’s great. The people who are life-license only, who call themselves “advisors” and handle retirement annuities (rollovers) should not be able to solicit business.
• On balance, it is a good thing and long overdue.
• I feel I am well situated to meet the needs of DOL. My broker-dealer has done an excellent job of implementing necessary protocols to meet the DOL regulations.
• This should have been done 20 years ago.
• Mostly just need to compile a checklist for record keeping. Fee only, so already use low cost funds, and compare fees from rollovers.
• I think this rule needs to extend to all advisors working with all clients in all situations.
• Ultimately will be a positive for most clients although smaller clients will inevitably be left with fewer options for face-to-face relationship. Roboadvisor options will be readily available.

And from the Detractors

• Another significant federal government overreach, overreaction and misguided effort while not at all understanding our business or relationship with our clients.
• Disloyal, weak industry leaders capitulated to an arrogant DOL and Obamunists. Industry needs a spine and understanding of free speech and caveat emptor.
• This entire DOL should be just summed up into, just do the right thing for the client! It really should be this simple. Government is getting carried away as always when they get their hands into things.
• Let the SEC make the rule. … DOL is missing the impact it will have on Americans – small account advice is gone.
• The action should have been directed to the individual firms/offices that were demonstrating abuses instead of the whole industry. There are too many reps moving to other firms after “problems.”
• Still hoping it is changed or overturned.
• Interpretation of the rule is hardly standardized, which makes it difficult to comply.
• Will be nice when everything is finalized so we can figure out an exact plan on how to proceed.
• Less panic, more clarity.
• The documentation is unreal when rolling assets over from qualified plans.
• In fee-based accounts, DOL is requiring a certain number of trades per account, not per client. This is regardless of account size. This requirement is detrimental to clients.
• Moving to fiduciary will make all clients less aggressively positioned and there will be less stories of incredible wealth building, conversely less failures. It will be very dull.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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