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As Dol Fiduciary Clears Latest Hurdle, Advisers Expect Changes Will Be Made

By Author: Terrance Power
Total Articles: 13

Fiduciary standard proponents praised Congress for keeping the lights on for the Department of Labor's fiduciary standard proposal.

The rule, which would require all advisers to act in the best interest of their clients in doling out retirement advice, could have been prevented or delayed by the addition of policy riders to the $1.15-trillion omnibus appropriations bill to be voted on by the House and Senate later this week. The bill dictates spending and keeps the government operating until next fall.

But the policy riders were left out of the bill by congressional negotiators, who concluded their work on the bill Tuesday night, thus almost ensuring that the fiduciary proposal will continue moving forward.

"Those of us who want to see a clarification of the definition of fiduciary are quite pleased with the outcome because it means five long years of waiting will only be one year of waiting," said Mike Webb, vice president of advisory firm Cammack Retirement Group in New York.

He and others expect the rule won't look exactly the same as it does now, especially since the Department of Labor promised to make tweaks based on input during the extended comments period.

"With all the comments, I think the DOL can arrive at a rule that won't make everyone 100% happy, but is going to make all constituent parties sufficiently OK with the rule that they can move forward," Mr. Webb said.

One consideration that Jason Smith, chief executive and founder of advisory firm Prosperity Capital Advisers in Westlake, Ohio, would like to see incorporated is the allowing of advisers to earn commissions. He said he has junior advisers, who are working with clients who have smaller assets, and they are compensated by fees and commissions.

"If they do not have an opportunity to earn commissions, then they are just working on fees," Mr. Smith said

The proposal as it stands now would make it difficult for some advisers to work with middle-income clients, according to some opponents of the rule.
"We won't be able to afford it as a business," Mr. Smith said. "I am in favor of the fiduciary rule, but I think they need to make changes so it is more reasonable to operate and serve those people."

Anthony Domino, an adviser with Associated Benefit Consultants in Rye Brook, N.Y., said there is still a ways to go before the rule comes to fruition.

"The potential for a legislative fix is not over," Mr. Domino said. "I suspect we are not at the end of this conversation."

Mr. Domino, who likened the recent DOL fiduciary proposal win to a cliffhanger, said more needs to be done. Read More

About The Author:

Contact me at tpower@ThePlatinum401k.com or at 813.774.3366 for more information about Retirement Plan Consultants. We've worked with multiple employer plan clients for over 25 years and are the industry leader in this niche field. We work with advisers and clients all over the country to reduce cost and employer liability. There's more information available on our website at www.ThePlatinum401k.com.

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