Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
By Sean Forbes
Nov. 17 — The financial services industry is all abuzz about what the election of Donald Trump will mean for the Labor Department’s fiduciary rule. But any uncertainty the industry has about the future of the rule hasn’t stopped most advisers from continuing to prepare for it.
Momentum to ax the rule is building. Rep. Ann Wagner (R-Mo.) told the Wall Street Journal and in a Facebook post Nov. 14 that she’s “confident” that the rule will be nixed by Trump and Republicans in Congress. The House Education and the Workforce Committee also released a press statement this week reiterating its opposition to the rule. The rule, which the administration calls the conflict of interest rule, requires advisers to retirement investors to put their clients’ interests ahead of their own.
For now, the Securities and Exchange Commission’s uniform fiduciary standard for broker-dealers is also off the table. SEC Chairman Mary Jo White told lawmakers at a House Financial Services Committee Nov. 15 that the commission won’t have its proposal ready before she leaves office, which she earlier announced would happen before the end of President Barack Obama’s term. Several lawmakers have criticized the Labor Department for not coordinating its rule with the SEC.
Even if the DOL’s rule is repealed, the industry is heading toward a more conflict-free landscape, with a tighter alignment with the interests of the client, Rob Foregger, co-founder of Next Capital Management LLC in New York, told Bloomberg BNA.
The fiduciary rule is “an accelerant” driving change that’s inevitable, Foregger said. “The reason I think it’s important to continue with the rule is that I think without it that it takes another 10 years for the industry to align towards the fiduciary standard,” he said.
Scott Puritz, managing director for Rebalance Inc., a robo-adviser based in Palo Alto, Calif., and Bethesda, Md., told Bloomberg BNA that he leans toward the “optimistic camp” about the fate of the fiduciary rule, because the DOL has prompted the industry to move toward greater disclosure.
“When you spend any time in the wealth management industry and in personal finance, you will see that there are hidden fees all over the place with the exclusive intention of making sure consumers can’t make informed decisions,” Puritz said. “Hidden fees are disgraceful. And I’m very comfortable going on record saying that.”
The industry as a whole has poured hundreds of millions of dollars, if not north of $1 billion, into upgrading their technology systems and in training to get ready for compliance with the fiduciary rule, which requires advisers to put their clients’ interests ahead of their own.
That’s a lot of money to throw away if the rule is ultimately nullified, Tom Embrogno, chief information security officer, co-founder, Docupace Technologies Inc., Las Vegas, told Bloomberg BNA.
Docupace provides business software to broker-dealers, registered investment advisers and financial advisers to handle back-office books, records and SEC processing requirements. The firm also provides cybersecurity services to its clients.
Advisers who are expecting the rule to disappear have a few options when it comes to their technological compliance measures, Embrogno said:
To contact the reporter on this story: Sean Forbes in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)